Berlin In October, German manufacturers lowered their prices for the first time in two and a half years. Producer prices fell by an average of 4.2 percent compared to the previous month, as the Federal Statistical Office announced on Monday.
“This was the first price drop compared to the previous month since May 2020.” In September there was still an increase of 2.3 percent.
The decline comes as a complete surprise: economists surveyed by the Reuters news agency had expected another increase of 0.9 percent. Compared to the same month of the previous year, the inflation rate weakened to 34.5 percent, after August and September had seen the highest increases since the survey began in 1949 at 45.8 percent each.
The development raises hopes that high inflation is gradually peaking. “A spectacular drop in prices after all those months of significant price increases,” said LBBW economist Jens-Oliver Niklasch.
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“Perhaps the first sign of a certain easing of price pressure caused by the economy.” The minus is primarily due to the fall in costs for bulk consumers.
Producer prices are seen as a precursor to the development of the cost of living. If the producers raise or lower their prices, this usually also affects private households, at least in part.
In the statistics, the prices are listed from the factory gate – even before the products are further processed or sold. In October, consumer prices were 10.4 percent higher than a year earlier, the highest inflation rate since 1951.
The main reason for the sharp rise in producer-level inflation is energy, which has cost significantly more since the start of Russia’s invasion of Ukraine on February 24th. Here, producer prices were 85.6 percent higher than in October 2021.
Light heating oil cost 76.2 percent more than a year earlier, fuel 30.8 percent more. Compared to the previous month of September, however, energy prices fell by an average of 10.4 percent, “mainly caused by the fall in the price of electricity and natural gas in distribution,” as the statisticians emphasized.
Food was 25.1 percent more expensive than in the same month last year. The prices for butter (by 66.3 percent), pork (by 47 percent), cheese and quark (by 38.3 percent) and milk (by 36.1 percent) rose particularly sharply. Coffee was 29.1 percent more expensive than in October 2021.
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