Energy sector pushes German PPI to decelerate 1.4% again in May

industria central alemania

Link Securities| The German Federal Statistical Office yesterday published that Germany’s producer price index (PPI) fell 1.4% in May compared to April, significantly more than the 0.7% decline expected by FactSet’s consensus of analysts. On a year-on-year-year basis, Germany’s PPI rebounded by 1.0% in the month of May (4.1% in April), a reading that was also well below the 1.7% increase expected by analysts. May’s year-on-year PPI growth rate was the lowest since January 2021, mainly due to a substantial drop in energy prices (-3.3%), with electricity prices falling by 10.2%. Declines were also observed in intermediate goods prices (-2.3%), in particular wood (-24.8%) and metals (-10.9%). On the other hand, excluding energy, Germany’s PPI rose by 3.2% year-on-year in May. In the month of May, the prices of non-durable consumer goods rose (10.1%, year-on-year), as well as food (11.9%); consumer durables (7.9%); and capital goods (6.5%), led mainly by machinery (8.2%) and vehicles (5.6%).

Assessment: In May, producer price growth continued to decelerate in Germany, mainly due to falling energy prices. Excluding them, the PPI rose 3.2%, with still strong year-on-year increases in the prices of consumer durables, non-durables and capital goods. Food prices, in turn, continued to rise at double-digit year-on-year rates in May. Despite the good trend in producer prices, in many cases they are still growing at worrying rates.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.