The decline in prices at manufacturer level has continued to moderate in Germany. In March, producer prices fell by 2.9 percent year-on-year, as the Federal Statistical Office in Wiesbaden announced.

The decline was 4.1 percent in February and 4.4 percent in January. Analysts had on average expected producer prices to fall by 3.3 percent in March.

In a month-on-month comparison, producer prices actually rose by 0.2 percent, as the statement continued. In this regard, the market had expected a decline of 0.1 percent.

The most important reason for the decline in producer prices year-on-year remains falling energy prices. Energy was 7.0 percent cheaper in March 2024 than in March 2023. Natural gas fell most significantly over the year, with a price decline of 15.4 percent. Electricity cost 12.6 percent less than a year earlier.

Producer prices capture price pressure at the manufacturer level by reflecting the producers’ sales prices. The development also affects consumer prices, on which the European Central Bank (ECB) bases its monetary policy. Because general inflation has recently weakened, the central bank is heading towards interest rate cuts. The first interest rate cut is generally expected in June.