Producer prices bring deflation

German consumer prices for May are still at +0.6 percent. Producer prices, one of the three important leading indicators for consumer prices, were reported this morning for May at -2.2 percent compared with May 2019. They continue to fall, after -1.9 percent, -0.8 percent, -0.1 percent and +0.2 percent in the previous months. A constant downward pull, which corresponds with a time lag to the big crash in oil prices in spring.

According to the statisticians, it is precisely this crash in energy prices that is largely responsible for the collapse of producer prices. The producer price for heating oil fell by 47.1 percent year-on-year. For fuels by 22.8 percent and for natural gas -13.4 percent. The producer prices for petroleum products as a whole fell by 27.5 percent compared to May 2019. Excluding energy, producer prices were 0.3 percent lower than in May 2019 and 0.2 percent lower than in April 2020. It is always necessary to point out with foresight (we think so), as was the case with consumer prices, so is the case with producer prices today. For weeks now, the oil price has been rising significantly again. So it is quite possible that one slides from deflation back slightly into positive territory. In June, or as late as July?

Chart für die Erzeugerpreise

Further statements of the statisticians in the wording:

Conspicuous price developments were seen in May for aircraft fuels, which were 68.3% cheaper than in May 2019 and 41.8% cheaper than in April 2020. Following the sharp price declines in 2019 and early 2020, the prices for secondary raw materials made from waste paper and waste cardboard were only 10.5% lower than in the same month of the previous year. Compared to April 2020, they rose by 47%.

Intermediate goods were 2.6% cheaper in May 2020 than in May 2019, down 0.1% compared with April 2020. Cheaper than a year earlier were mainly pig iron, steel and ferro-alloys (-9.6%). Also paper and paperboard were cheaper(-5.8%). Chemical raw materials cost 8.2% less, cereal flour was 3.5% cheaper. In contrast, precious metals and semi-finished products were 25.6 % more expensive than in May 2019. Products made of cement, gypsum and concrete cost 3.7 % more than a year earlier.

Consumer goods were 1.3% more expensive in May 2020 than in May 2019. Compared to April 2020, these prices fell by 1.1%. Food was 1.5% more expensive than in the same month of the previous year. Sugar cost 17.5 % more than a year ago. Processed meat was 14.1 % more expensive than in the same month last year. In contrast, fresh or chilled pork was 7.2 % cheaper than in May 2019, with prices down 12.5 % on April 2020 alone. Cheaper than in May 2019 were also butter with a minus of 25.2% (-12.2% compared to April 2020) and potato products with -8.6%.

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