Producer Prices for Industrial Products in Germany Plummet 14.7% in September 2023: A Record Decline Driven by Lower Energy Costs and Decreased Metals Prices

October 25, 2023

Producer prices of industrial products (domestic sales), September 2023
-14.7% on the same month a year earlier
-0.2% on the previous month

The producer prices of industrial products were 14.7% lower in September 2023 than in September 2022. This was the largest decline compared with the same month a year earlier since the data were first collected in 1949. In August 2023, the year-on-year change rate was -12.6%. The development is mainly attributable to a base effect caused by the very high price level of the previous year. As a result of the war in Ukraine, the producer price increase in August and September 2022 (+45.8% each from the same month a year earlier) was the highest ever registered since records began. The Federal Statistical Office (Destatis) also reports that producer prices were down 0.2% in September 2023 compared with the previous month.

Lower energy prices were the main reason for the year-on-year decline in producer prices. Intermediate goods were also less expensive than in the same month a year earlier, whereas higher prices had to be paid for consumer and capital goods than in September 2022.

Year-on-year decline in energy prices mainly due to lower electricity prices

Energy prices in September 2023 were down 35.3% from September 2022. Compared with August 2023, energy prices dropped by 0.4%. Energy prices had soared after the start of the Russian attack on Ukraine in February 2022, and reached an all-time high in September 2022. In September 2023, lower electricity prices had the biggest influence on the year-on-year rate of change for energy. Across all customer groups, electricity prices declined by 46.2% from September 2022 (-2.0% from August 2023).

Natural gas (distribution) cost 36.9% less in September 2023 than in September 2022 across all customer groups. Compared with August 2023, natural gas prices were down 0.6% in September 2023.

The prices of mineral oil products were down 9.0% in September 2023 compared with September 2022, but were up 5.6% from August 2023. Light heating oil cost 10.9% less than a year earlier (+11.4% compared with August 2023). Motor fuel prices were 8.0% lower (+4.4% from August 2023).

When energy prices are excluded, producer prices were 0.8% higher than in September 2022 but 0.1% lower than in August 2023.

Price decreases for intermediate goods mainly due to lower prices of metals and basic chemicals

Intermediate goods prices were 4.2% lower in September 2023 than a year earlier. Compared with the previous month, they were down 0.2%.

The year-on-year decline in prices was mainly due to the price development for metals and basic chemicals. Metal prices dropped by 11.2% from September 2022 and were 0.8% lower than in the previous month. Basic iron, steel and ferro-alloys were 18.5% less expensive than in September 2022. The prices of concrete reinforcing bars declined by 33.8% year on year. Basic chemicals (total) were 11.6% less expensive than in the same month of the previous year.

Very large price decreases were also recorded for fertilisers and nitrogen compounds (-42.9% compared with September 2022). Wood prices were 20.8% lower than in September 2022, and the prices of secondary raw materials were down 14.0%.

By contrast, large price increases compared with September 2022 were observed for lime and plaster (+30.3%), ready-mixed concrete (+25.7%), cement (+23.1%) and hollow glass (+21.5%). Gravel for construction and natural sands were 17.0% more expensive.

Increase in non-durable consumer goods prices mainly due to higher food prices

In September 2023, the prices of non-durable consumer goods were 5.3% higher than in September 2022. Compared with August 2023, however, they were down 0.3%. Food cost 5.5% more compared with the previous year, and prices were also down from August 2023 (-0.5%). There was a particularly pronounced increase in sugar prices (+84.7% on September 2022). Processed potatoes were 28.5% more expensive than in September 2022, ice cream prices were up 18.5% and processed and preserved fruit and vegetables cost 17.2% more than a year earlier. Pork prices increased by 12.1% year on year. The prices of crude vegetable oils decreased by 35.0% and butter prices dropped by 32.6%. Processed liquid milk was 8.6% less expensive than in September 2022, and coffee was 4.0% less expensive.

A year-on-year rise of 4.7% was observed for durable consumer goods in September 2023, which was especially due to the development of prices for furniture (+5.1% on September 2022) and domestic appliances (+5.2% on September 2022). Compared with August 2023, the prices of durable consumer goods were down 0.1%.

Capital goods prices rose by 4.8% year on year, mainly driven by increases in machinery prices (+6.0% on September 2022) and in the prices of motor vehicles, trailers and semi-trailers (+3.9% on September 2022). Compared with August 2023, capital goods prices were up 0.1%.

Source: DESTATIS
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