What a shock on a Tuesday morning! German wholesale prices, which are important indicators for consumer prices (inflation) alongside producer prices and import prices, are currently sliding into deflation! Earlier we had just published the official inflation data for July with an official 1.7% from a domestic point of view (1.1% from an ECB point of view). And now this. As the German statisticians have just reported, wholesale prices in July are down by 0.1% year-on-year! In a month-on-month comparison with June, it is -0.3%.
The following table shows the changes for each month compared to the same month of the previous year. You can see that the current weakness did not come overnight. In June it was still +0.3%, in May +1.6%, and in April +2.1%. So it has been a step by step fast descent within 3 months! This deflationary value for wholesale prices means nothing good for the consumer prices at the end of the price chain (inflation). Will they therefore be even weaker in the coming months? Well conceivable! Here detailed information about the current wholesale prices in the wording from the statisticians:
In July 2019 the 3.1 % drop in wholesale prices for petroleum products had the greatest impact on the overall development compared with the same month of the previous year. There were also sharp price declines compared with the previous year in the wholesale of used and residual materials (-9.5%) as well as data processing equipment, peripheral equipment and software (-5.7%). By contrast, prices for livestock (+14.0%) and meat and meat products (+5.2%) in particular were higher at wholesale level than in July 2018.