German wholesale prices are only slightly falling
Wholesale prices in Germany fell only slightly in July. They decreased by 0.1 percent compared to the previous year, according to the Federal Statistical Office. Although this is the 15th consecutive decline, it is also the smallest in this series. In June, there was a decrease of 0.6 percent, and in May, it was 0.7 percent. From June to July, prices rose by 0.3 percent.
Wholesale is considered a crucial link between manufacturers and end consumers. Price cuts usually reach consumers with a delay and at least partially. Inflation has recently picked up again: Consumer goods and services became 2.3 percent more expensive on average in July, after 2.2 percent in June.
Many experts expect a decline in the second half of the year - also in the Eurozone as a whole. This would open the door for the European Central Bank (ECB) to further interest rate cuts, after it initiated the rate hike in June. The key interest rate was lowered from a record high of 4.50 percent to 4.25 percent.
The slight decline in wholesale prices in July is mainly due to the development of chemical products, which became 8.4 percent cheaper compared to the previous year. Also noticeable are the decreases in prices for live animals (-9.5 percent), iron, steel, and semi-finished products thereof (-7.7 percent), and data processing equipment (-5.5 percent).
In contrast, prices for coffee, tea, cocoa, and spices (+19.5 percent) and non-ferrous ores, non-ferrous metals, and semi-finished products thereof (+15.4 percent) were significantly more expensive in July 2023 than in the previous year. Also, more was paid for waste and secondary raw materials (+15.2 percent), sugar, sweets, and baked goods (+9.5 percent), and tobacco products (+4.7 percent) on the wholesale level.
Despite being predominantly produced in other countries, Germany imports a significant amount of coffee, tea, and spices, which saw a significant price increase in July. Compared to their German counterparts, those who specialize in the German production of chemical products experienced a substantial price decrease.
