German producer prices post smallest increase in two years

According to statistics released on Friday, German producer prices rose at the weakest annual rate in two years in April, indicating that inflation in Europe’s largest economy may decline further.

According to the Federal Statistical Office, producer prices for industrial items rose 4.1% in April compared to the same month last year, following a 6.7% increase in March.

In April, a Reuters survey predicted a 4.0% year-on-year increase.

Producer pricing indicate how consumer prices will evolve. According to the LBBW analyst, the declining trend in producer pricing indicates that inflation may be on the decline.

Producer price inflation peaked at 45.8% in August and September 2022 and has subsequently declined for seven months in a row.

This is owing to energy prices, which were just 2.8% higher in April compared to the same month last year.

Energy costs had already increased dramatically during Russia’s war on Ukraine in March 2022, and this, along with price decreases in recent months, resulted in a very mild year-on-year increase, according to the statistics office.

Capital goods costs were one of the key factors for the 6.8% increase in producer prices in April compared to the same month last year.