October 24, 2023

According to the Federal Statistical Office (Destatis), Germany’s producer prices for industrial products fell 14.7% in September relative to September 2022, down 0.2% compared to August 2023. This was the greatest year-on-year fall since 1949. In August 2023, the year-on-year change rate was -12.6%, mainly due to a base effect from the previous year’s extremely high price level. The war in Ukraine led to the highest producer price rise of 45.8% year on year in August and September 2022.

The main contributor to the year-on-year decline in producer prices was lower energy prices. Intermediate goods were also less expensive than in September 2022, while higher prices were required for consumer and capital goods.

In September 2023, energy prices decreased by 35.3% compared to September 2022, a drop of 0.4% compared to August 2023. The decrease was primarily due to lower electricity prices, which declined by 46.2% across all customer groups relative to September 2022. Natural gas prices decreased by 36.9% across all customer groups compared to September 2022, down 0.6% from August 2023. Mineral oil prices decreased by 9.0% compared to September 2022, but increased by 5.6% from August 2023. Light heating oil costs decreased by 10.9% relative to a year ago, and motor fuel prices were 8.0% lower for the same period. Producer prices excluding energy prices were up 0.8% relative to September 2022 but down 0.1% from August 2023.

Intermediate goods prices were 4.2% lower in September 2023 than the prior year, and 0.2% lower than the prior month. The decline was primarily due to price changes for metals and basic chemicals. Metal prices fell 11.2% from September 2022, while basic iron, steel, and ferro-alloys were 18.5% less expensive. Concrete reinforcing bars fell 33.8% year on year and basic chemicals were 11.6% less expensive. Fertilizers and nitrogen compounds experienced a large decrease of 42.9%, while wood prices were 20.8% lower relative to September 2022. Secondary raw material prices were down 14.0%. However, lime and plaster prices increased by 30.3%, ready-mixed concrete by 25.7%, cement by 23.1%, and hollow glass by 21.5%. Gravel for construction and natural sands were 17.0% more expensive.

Non-durable consumer goods prices were 5.3% higher in September 2023 than in September 2022, but 0.3% lower than in August 2023. Food prices were 5.5% higher relative to September 2022, with sugar prices increasing by 84.7%. Processed potatoes were 28.5% more expensive than in September 2022, while ice cream prices increased by 18.5%. Processed and preserved fruit and vegetables cost 17.2% more than a year earlier. Pork prices increased by 12.1% year on year, while crude vegetable oil prices 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.

Durable consumer goods prices rose by 4.7% year on year in September 2023, mainly due to increases in furniture (5.1%) and domestic appliances (5.2%). Capital goods prices rose by 4.8%, mainly driven by increases in machinery prices (6.0%) and motor vehicles, trailers, and semi-trailers (3.9%).

Disclaimer:

Analyst Certification – The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view (s) expressed by that research analyst in this research report.

Company Disclosure – The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.