German producer prices drop more steeply once more.
Germany's producer prices have taken a dive once more, dipping by 3.3% year-on-year in April as per the Federal Statistical Office's report. It's a sharper decline than the previous month's 2.9% decrease. Although the downward trend is growing weaker, it's important to note that 2022's producer prices made a significant leap due to the Ukraine war, only to be followed by a steep reversal.
The primary cause for the drop in prices? Falling energy costs. Energy was 8.2% cheaper in April when compared to the previous year. Natural gas experienced the most significant decline, dropping by 18%. Meanwhile, electricity saw a 14% decrease, while mineral oil prices remained stable. Intermediate products saw a price reduction, but consumer and capital goods cost more.
The producer prices give a glimpse into the price squeeze experienced by manufacturers, influencing the rates they charge for their products. Consumer prices are also impacted by these fluctuations, which is what the European Central Bank (ECB) considers in their monetary policy decisions. With recent signs of weakening inflation, the ECB is anticipated to ease their monetary policy with the first interest rate cut predicted in June.
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Source: www.ntv.de
