In Germany, price inflation at the manufacturer level has weakened for the fourth time in a row, albeit from a high level. According to preliminary figures, producer prices fell by 1.0 percent in January compared to December 2022, as reported by the Federal Statistical Office in Wiesbaden.

Year-on-year, producer prices rose by 17.8 percent compared to January 2022. In August and September, the prices manufacturers receive for their goods rose at a record rate of 45.8 percent each. Since then, inflation has been declining.

The statisticians qualified that the results with regard to the electricity and gas prices are provisional. The background is the price brake for electricity and gas that has been in force since January, which will only be implemented from March. The price indices could therefore initially only be calculated for the reporting months of January and February without taking into account the electricity and gas price brake. The results will be updated in March.

Energy and food significantly more expensive than a year ago

Energy prices are still the main driver of the movements. Year-on-year, they are still 32.9 percent higher, but they are down 5.0 percent from the previous month. Without energy, producer prices would have risen by 10.7 percent year-on-year and thus less than with energy. In addition to energy, food and various intermediate goods were significantly more expensive than a year ago.

Producer prices capture producer-level price pressure by reflecting producer selling prices. The development is also having an impact on consumer prices, on which the European Central Bank (ECB) bases its monetary policy. In view of the high inflation, the ECB has, after some hesitation, raised its key interest rate significantly. The central bank intends to stick to this course for the time being.