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.
