Wholesale prices in Germany experienced the least decline in a year.
The price drop in the German wholesale trade is slowing down. In May, sales prices dropped only 0.7% compared to the previous year, according to the Federal Statistical Office.
This marks the 13th consecutive decline, but also the smallest in this series. In April, there was a decrease of 1.8%, in March -2.6%. For the entire year 2023, there was still an average increase of 0.6%. From April to May, prices went up slightly by 0.1%.
The wholesale trade is believed to be a pivotal connection between producers and final consumers. Often, price cuts take effect later and only partially with consumers. In May, the German inflation rate rose for the first time this year - to 2.4% from 2.2% prior. The Ifo Institute suspects that the 2% marker will be missed for the first time in more than three years in August.
The main factor for the decline in wholesale prices in the previous month was the development in chemical products. Prices in this sector fell by 13.9% compared to May 2023. Iron, steel and semi-finished goods were considerably cheaper (-12.1%), as well as milk, dairy products, eggs, edible oils and fats (-5.1%), and cereals, raw tobacco, seeds and feed (-5.1%).
In the wholesale trade, non-iron ores, non-iron metals, and semi-finished goods were more expensive (+9.7%), as well as coffee, tea, cocoa, and spices (+8.2%). Particularly, cocoa had seen a significant price hike. Moreover, sugar, sweets, and baked goods (+7.2%), fruit, vegetables, and potatoes (+6.4%), and tobacco products (+5.4%) were significantly costlier than a year ago.
Read also:
The reason for the smallest decline in wholesale prices in Germany in over a year can be attributed to the modest decrease in chemical products. Despite this, the overall average increase in wholesale prices for the entire year 2023 still stood at 0.6%.
The decrease in wholesale prices in the chemical sector, specifically, was significant, with prices dropping by 13.9% compared to the same month the previous year.
The German government reported that wholesale prices in the chemical industry saw the most significant decrease among various products in May 2023.
