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Producer prices continue to fall: decline is weakening
Producer prices in Germany are falling more slowly than expected. Experts had expected a sharper decline. Energy prices are significantly affected. Impact on consumer prices and ECB interest rates expected.
Producer prices continue to fall: decline is weakening
The decline in prices at manufacturer level in Germany continued to slow in March. According to information from the Federal Statistical Office in Wiesbaden, producer prices fell by 2.9 percent year-on-year. This represents a decrease compared to February, when the decline was 4.1 percent, and January, when the decline was 4.4 percent. Analysts had forecast an average decline in producer prices of 3.3 percent for March.
In contrast to the year-on-year comparison, producer prices rose by 0.2 percent month-on-month. This surprised the market as it had been expected to fall by 0.1 percent. The main reason for the decline in producer prices over the year remains the falling energy prices, which were 7.0 percent cheaper in March 2024 than in the same period last year. Natural gas prices fell particularly significantly, with prices falling by 15.4 percent, while electricity cost 12.6 percent less than a year before.
Producer prices reflect price pressure at the producer level as they represent producers' selling prices. This development also affects consumer prices, which the European Central Bank (ECB) takes into account for its monetary policy. Due to the general slowdown in inflation, the central bank is heading towards interest rate cuts, with the first interest rate cut expected to take place in June.