And yet another alarm signal in the matter of more than weary inflation in Europe. The Federal Statistical Office for Germany has just published the producer prices for the month of August. Monthly comparisons have been deflationary several times recently – currently it is -0.5% compared to July. But much more important are the annual comparisons, i.e. from August 2019 to August 2018. There we currently only have a plus of 0.3%. In the previous months it was +1.1%, +1.2%, +1.9% and +2.5%. So you can see that producer prices are moving rapidly in the direction of deflation!
In addition to wholesale prices and import prices, producer prices are the most important indicators for the end of the price chain, consumer prices (inflation). The following chart, which goes back to 2014, makes one thing more than clear. Producer prices for natural gas in particular are pulling the overall average down brutally. Oil prices also dampen prices. At +6%, electricity prices were the strongest positive factor for producer prices.
Here further details from the Federal Statistical Office in the wording:
In August 2019, consumer goods were 1.7 % more expensive than in August 2018. Compared with July 2019, these prices rose slightly by 0.1 %. Food prices were 2.2% higher than in the same month of the previous year. In August 2019, pork (+17.6%) and processed potatoes (+16%) again recorded the highest price increases compared with the same month of the previous year. Butter (-32.9 %) and sugar (-14.8 %) in particular were cheaper than in August 2018. Coffee cost 6.5% less than a year earlier.
Prices for capital goods in August 2019 were 1.5% higher than a year earlier, while consumer durables were 1.3% more expensive (both +0.1% compared with July 2019).
Intermediate goods were 0.9% cheaper in August 2019 than in August 2018. These prices fell by 0.2% compared with July 2019. Electronic integrated circuits (-13.7 %) and metallic secondary raw materials (-13.6 %) were cheaper than a year earlier. Metals cost 2.6 % less, pig iron, steel and ferroalloys 5.1 % less. Prices for precious metals and semi-finished products (+22.7 %) and products made of concrete, cement and gypsum (+4.7 %) showed an above-average increase compared with the same month of the previous year.