Production Costs Are Rising Rapidly in Germany

Producer prices in Germany rose by 6.7% in September compared with the same period last year. According to Germany’s Federal Statistical Office (Destatis), this figure exceeded market expectations of 6.2%. The last time producer prices recorded a higher increase was in March 2023, when they rose by 7.5%.

After increasing by 4.6% in August, the index also rose by 1.9% month-on-month in September. Excluding energy prices, annual producer price growth stood at 3.2%.

The main drivers of the price increase were energy products and geopolitical tensions in the Middle East. Energy prices rose by 14.9% year-on-year and 5.8% month-on-month. Oil prices increased by 51.3% compared with September last year. Light heating oil prices surged by 91.8%, naphtha prices rose by 53.8%, and motor fuel prices increased by 48.6%.

In contrast, food prices fell by 4.1% year-on-year. Butter prices decreased by 34.8%, while beef prices dropped by 9.9%. Metal prices, however, rose by 14%. Copper and semi-finished copper products recorded a particularly sharp increase of 31.4%.

Economists say the rise in producer prices could eventually affect consumer prices as well. The Bundesbank forecasts that inflationary pressures in Germany will persist in the coming months and that inflation could remain high until the middle of next year. In September, annual inflation in Germany reached 3.3%, its highest level in three years.