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Industry: Producer prices are falling more significantly again

Industry: Producer prices are falling more significantly again

Manufacturers breathe a sigh of relief: Prices fall in April – energy in particular becomes cheaper, with the exception of mineral oil.

In Germany, prices at manufacturer level have fallen sharply again. In April, producer prices fell by 3.3 percent year-on-year, as the Federal Statistical Office in Wiesbaden announced.

In the previous month the decline was 2.9 percent. However, the decline is tending to slow down. In 2022, producer prices temporarily rose by almost 40 percent as a result of the Ukraine war, after which a sharp countermovement set in.

The most important reason for the price decline remains falling energy prices. Energy was 8.2 percent cheaper in April than a year earlier. The price of natural gas fell most significantly over the year, with prices falling by 18 percent. Electricity cost 14 percent less than a year earlier, while mineral oil was more expensive. Intermediate goods cost less, while consumer and capital goods cost more.

Producer prices capture the price pressure at the manufacturer level by reflecting the producers’ selling prices. The development also affects consumer prices, which the European Central Bank (ECB) bases its monetary policy on. Because general inflation has recently weakened, the central bank is moving towards easing its monetary policy. The first interest rate cut is expected at the beginning of June.

Source: Stern

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