There has been a contraction in Germany’s producer prices for industrial products last month relative to the same period last year. 

The contraction for the year was 11 per cent while month-over-month prices went down 0.1 per cent in October compared to the previous month of September 2023. The Federal Statistical Office of Germany, (Destatis) says the year-on-year change rate in September 2023 (-14.7 per cent) was the greatest year-on-year fall since 1949, mainly due to a base effect from the previous year’s extremely high price level.

The war in Ukraine led to the highest producer price rise of 45.8 per cent year on year in August and September 2022 then the annual growth slowed slightly in October 2022 to 34.5 per cent. The main contributor to the year-on-year decline in producer prices was lower energy prices. 

Impact on prices of goods

Intermediate goods were also less expensive than in October 2022, while higher prices were required for consumer and capital goods. In October 2023, energy prices decreased by 27.9 per cent compared to October 2022, a slight drop of 0.1 per cent compared to September 2023. 

The decrease was primarily due to lower electricity prices, which declined by 36.2 per cent across all customer groups relative to October 2022. Natural gas (distribution) prices decreased by 29.6 per cent across all customer groups compared to October 2022, up 1.4 per cent from September 2023. 

Mineral oil products cost 13.2 per cent less compared to October 2022. Light heating oil prices decreased by 22.3 per cent relative to a year ago, and motor fuel prices were 12.8 per cent lower for the same period. 

Producer prices excluding energy prices were up 0.2 per cent relative to October 2022 but down 0.2 per cent from September 2023. Intermediate goods prices were 4.6 per cent lower in October 2023 than the prior year, and 0.2 per cent lower than the prior month. 

Metal prices

The decline was primarily due to price changes for metals and basic chemicals. Metal prices fell 11.7 per cent from October 2022, while basic iron, steel, and ferro-alloys were 18.9 per cent less expensive. 

The prices of concrete reinforcing bars fell 30.9 per cent year on year and basic chemicals (total) were 12.1 per cent less expensive than in October 2022. Fertilizers and nitrogen compounds experienced a very large decrease in prices of 45.4 per cent, while wood prices were 17.9 per cent lower relative to October 2022 and prepared feeds for farm animals were 22.3 per cent less expensive. 

However, large price increases were registered for: ready-mixed concrete (+24.7 per cent), cement (+22.0 per cent), lime and plaster (+19.9 per cent) and hollow glass (+17.5 per cent). Gravel for construction and natural sands were 17.1 per cent more expensive. Non-durable consumer goods prices were 3.9 per cent higher in October 2023 than in October 2022, but 0.2 per cent lower than in September 2023. 

Food prices

Food prices were 3.7 per cent higher relative to October 2022 but down 0.3 per cent from September 2023. Processed potatoes were 29.4 per cent more expensive than in October 2022, while preserved fruit and vegetables prices increased by 16.0 per cent year-over-year and pork cost 10.4 per cent more than a year earlier. 

Crude vegetable oil prices decreased by 34.1 per cent and butter prices dropped by 29.5 per cent. Processed liquid milk was 8.8 per cent less expensive than in October 2022, and coffee was 4.6 per cent less expensive. 

Durable consumer goods prices rose by 4.2 per cent year-on-year in October 2023, mainly due to price increases for furniture (+4.8 per cent), a 0.2 per cent increase relative to September 2023. Capital goods prices rose by 4.4 per cent, mainly driven by increases in machinery prices (+5.4 per cent) and motor vehicles, trailers, and semi-trailers (+3.9 per cent).