Producer prices continue to fall significantly. This is good news for consumers because it has a direct impact on the inflation rate.
German producer prices fell sharply in October for the fourth month in a row. Producers of commercial products – from butter to gasoline – demanded an average of 11.0 percent less than a year earlier, as the Federal Statistical Office announced.
Economists surveyed by the Reuters news agency had expected a decline of this magnitude, after September saw a decline of 14.7 percent, the largest decline since the survey began in 1949. From September to October, producer prices also fell, although only by 0.1 percent.
Positive effect on inflation
The development is good news for consumers: the prices for products are recorded in the statistics before they are further processed or go on sale. They therefore allow early conclusions to be drawn about the development of consumer prices. At 3.8 percent in October, these rose more slowly than they had in more than two years. Economists expect that the inflation rate will continue to fall by the end of the year.
“The development can still be attributed in particular to a base effect due to the very high price level in the previous year,” explained the statisticians regarding the current development of producer prices. In August and September 2022, as a result of the war in Ukraine, these rose more sharply than ever since the survey began (+45.8 percent in each case), and slightly less sharply in October 2022 at 34.5 percent.
Energy cheaper, food more expensive
Producer prices were dampened last month primarily by energy, which cost 27.9 percent less than in October 2022. Electricity prices fell by 36.2 percent. Light heating oil fell by 22.3 percent, fuels such as gasoline by 12.8 percent. 29.6 percent less was charged for natural gas.
Food, on the other hand, cost an average of 3.7 percent more than in the same month last year. Processed potatoes rose in price by 29.4 percent. Fruit and vegetable products cost 16.0 percent more than a year earlier. The price of butter, on the other hand, fell by 29.5 percent, liquid milk was 8.8 percent cheaper and coffee was 4.6 percent cheaper than a year ago.