Price pressure continues to ease. In September, wholesale prices fell by 4.1 percent, the most since May 2020. Experts also expect inflation to ease.
Falling energy prices are causing decreasing price pressure in wholesale. Wholesale prices fell by 4.1 percent in September compared to the same month last year. As the Federal Statistical Office announced, this is the sharpest decline in three and a half years. The wholesale prices for petroleum products fell by almost 20 percent.
The statisticians also recorded a significant drop in prices for grain, chemical products and metals. Food, on the other hand, was sometimes significantly more expensive than a year ago. For example, the prices of fruit, vegetables and potatoes rose by almost 20 percent.
The Federal Statistical Office justifies this development with so-called base effects, which means that goods and goods that were particularly expensive a year ago are now cheaper, whereas the increase in food prices only started later last year.
Oil prices are rising again
“As with import and producer prices, the relief effects from the past few months are now also being felt in wholesale prices,” explains Ulrich Kater, chief economist at DekaBank. “These effects continue, even though the price of oil had risen again before the Middle East crisis.” The oil exporters Saudi Arabia and Russia had agreed to limit production volumes. At the same time, global demand had grown.
Wholesale prices are seen as harbingers of consumer price developments, i.e. inflation. The Federal Statistical Office calculated a rate of 4.5 percent for September. In the previous months, inflation had been over six percent. “The relief should continue into November and also have a positive impact on consumer prices,” said Ulrich Kater.
This assessment is supported by the fact that producer prices, another harbinger of inflation, are on the decline. According to the Federal Statistical Office, the prices of producers of agricultural goods fell by 5.6 percent compared to the same month last year, with rising costs for fruit and vegetables also clouding the picture, while milk and meat became cheaper.
“Four percent is the new normal”
The European Central Bank (ECB) has set itself the goal of bringing the inflation rate back down to around two percent. Hendrik Leber, managing director of the Acatis asset management company, believes that this is unrealistic. “Four percent is the new normal,” said Leber in “Update Economy” on tagesschau24. “The economy can plan for this relatively well.”
Inflation is no longer determined only by the amount of money in circulation, as the textbooks suggest, said Leber. Factors such as the expensive restructuring of the economy to make it more sustainable and the costs of the current crises are crucial.