Producer prices in Germany fell for the first time in two and a half years

Producer prices in Germany fell for the first time in 2.5 years in July.

The German Federal Statistical Office (Destatis) announced the results of the Producer Price Index (PPI) for July.

Consequently, the country’s PPI decreased 1.1 percent in July compared to the previous month and 6 percent annually. Thus, producer prices in many fields, from milk to cars, fell for the first time annually after falling 0.5 percent in November 2020.

The Destatis statement recalled that “the last similar decrease compared to the same month of the previous year was due to the global financial crisis of October 2009.” The PPI in the country decreased by 7.6 percent in October 2009.

In the PPI, which had a small increase of 0.1 percent in June, market expectations for July were for a 5.1 percent decrease.

ACCENTUATED BASE EFFECT

In the Destatis statement, it was highlighted that the most important reason for the price drop in July was the base effect, which resulted from the very high price level of the previous year, and that energy, which cost 19.3 percent less in July compared to the same month a year earlier, it was the price effect in question.

In July, electricity prices fell 30 percent compared to a year earlier, while petroleum products were 16.6 percent cheaper. Food products, on the other hand, were 9.2 percent more expensive on average in July compared to a year earlier.

In the statement, it was also emphasized that producer prices, excluding energy, were 2 percent more expensive than a year ago.

In the statement, it was indicated that there was an annual increase of 87.5 percent in sugar prices and 18.5 percent in the price of fruits, and that the price of butter was 30.4 percent cheaper. and the price of vegetable oil 38.8 percent cheaper in July compared to the same period of the previous year.

Meanwhile, food prices remain one of the main drivers of inflation in Germany. Annual inflation in Germany, which was 6.4 percent in June, dropped to 6.2 percent in July due to lower annual oil prices. Food prices, on the other hand, rose 11 percent in July compared to a year ago.