Steel mill in Duisburg: Sharp declines in energy prices
Photo: Rolf Vennenbernd / dpa
In Germany, prices at the manufacturer level have fallen more sharply than at any time since official recording began. In August, producer prices fell by 12.6 percent year-on-year, according to the Federal Statistical Office in Wiesbaden (more information can be found here). This was the sharpest decline since surveys began in 1949. However, analysts had expected this development.
The statisticians explained the sharp decline in prices with a so-called "base effect": Last year, the prices that manufacturers receive for their goods had risen at times at a record rate of almost 46 percent. The sharp decline is currently also due to the basis for comparison, the price increase last year. The main reason at the time was Russia's war against Ukraine, which had made energy and many raw materials extremely expensive. In the meantime, however, prices have fallen again, which is also depressing general inflation at company level.
Energy cheaper year-on-year – but oil prices are rising
The sharp decline in producer prices in August was also driven by the price declines for energy, but also for intermediate goods. Energy was 31.9 percent cheaper than a year earlier. On a month-on-month basis, however, energy prices rose. Price increases for consumer and capital goods continued to weaken year-on-year. Recently, however, there have been signs of a significant increase in prices on the crude oil markets. This could also drive up costs for gasoline, for example, with a time delay.
Producer prices capture price pressures at the producer level by mapping producers' selling prices. The development also has an impact on consumer prices, which the European Central Bank (ECB) uses to base its monetary policy. Due to high inflation, the ECB has raised its key interest rates significantly since last summer, most recently last Thursday.