German Wholesale Prices Continue to Decline, Pointing to Lower Inflation
Wholesale Prices Drop for Sixth Consecutive Month
German wholesale prices have fallen for the sixth month in a row, according to data from the federal statistics office. This decline is primarily attributed to lower prices for mineral oil products, signaling the possibility of lower inflation in the coming months. In September, wholesale prices dropped by 4.1% compared to the same period last year, marking the largest decrease since May 2020.
Mineral Oil Products Drive Overall Price Decline
The significant decrease in prices for mineral oil products, down 19.8% year-on-year, is the main contributor to the overall decline in wholesale prices. This drop is attributed to a base effect resulting from high prices last year due to the war in Ukraine. It is important to note that price reductions in the wholesale trade sector usually take time to reach consumers.
Impact on Inflation and Consumers
The easing price pressures in the wholesale trade sector indicate a potential decrease in inflation rates in Germany in the upcoming months. Wholesalers serve as intermediaries between manufacturers and consumers, and any price reductions they experience are likely to be passed on to consumers, albeit with a delay. In September, the inflation rate dropped to 4.3%, reaching its lowest level since Russia invaded Ukraine in February 2022.
Month-on-Month Wholesale Price Increase
Contrary to the overall downward trend, September witnessed a slight month-on-month increase of 0.2% in wholesale prices, as reported by the federal statistics office.
In conclusion, German wholesale prices have continued to decline, primarily driven by lower prices for mineral oil products. This decline suggests the possibility of lower inflation rates in the future. Although wholesalers act as a link between manufacturers and consumers, it may take some time for price reductions to be fully realized by consumers. September saw a marginal increase in wholesale prices on a monthly basis, but the overall trend remains downward.
