The strongest drop in German import prices in more than 36 years signals a further easing in inflation. Imports fell in July by an average of 13.2 percent compared to the same month last year, as the Federal Statistical Office announced on Wednesday. That was the strongest price drop since 1987. “As in the previous months, the decisive factor for the current drop is above all a base effect from the high price increases in the previous year due to the war in Ukraine,” it said.
As a result, imports had already become noticeably cheaper in June (-11.4 percent) and May (-9.1 percent). From June to July, prices fell by 0.6 percent. Economists had expected stagnation here. “The inflation push from the outside is decreasing significantly, which also speaks for a further decline in the inflation rate,” said Commerzbank economist Ralph Solveen. “However, at the same time the internal price pressure has increased, among other things due to the sharp rise in wages, so that the inflation problem is far from being solved.” Since the German economy obtains many preliminary products and raw materials from abroad, falling import prices also affect general inflation with a delay. The cost of living is expected to have risen 6.0 percent in August from a year earlier, slower than July’s 6.2 percent, economists said. The statistics office wants to publish a first estimate in the afternoon
Food from abroad is becoming more expensive
In July, energy imports were 47.4 percent cheaper than a year earlier. One reason for this is falling prices for imported natural gas: minus 58.7 percent. Electricity (-75.4 percent), hard coal (-63.7 percent), petroleum products (-31.4 percent) and crude oil (-33.0 percent) were also significantly cheaper. “The significant drop in import prices is largely due to the fact that many goods were scarce a year ago – i.e. relatively shortly after the start of the Ukraine war – and had therefore temporarily become noticeably more expensive,” said Solveen. “In the meantime, prices have at least partially normalized.” The prices for imported consumer goods, on the other hand, rose by 1.2 percent.
Food from abroad also had to be paid more: Here the surcharge was 3.9 percent. The prices for fruit and vegetable products (+8.8 percent), beverages (+6.1 percent) and meat and meat products (+5.6 percent) rose particularly strongly. In contrast, milk and milk products were 11.5 percent cheaper than a year ago. Cars and car parts (+4.9 percent) and machinery (+3.6 percent) were more expensive, while intermediate goods – including fertilizers, pig iron, steel and ferroalloys – were 9.5 percent cheaper.