Berlin, Germany (4E) – Producer prices in Germany continue their decline in August due lower energy prices, despite the sharp rise in prices for consumer goods, particularly food, according to federal statistics office data released Friday.
August producer prices fell 0.1 percent from the previous month and 0.5 percent lower from the previous year.
The statistics agency made changes on its producer price index calculation, using a weighing system that is different and “more up-to-date” for the various index components, in which technically it now uses 2010 as a reference instead of 2005. The decision could be the reason for the off-the-mark forecasts by economists, which predicted slightly higher factory gate prices in August.
The weak result masks the sharp price increases in consumer goods. Food prices jumped 3.7 percent in August from the year-earlier period, as milk prices climbed 19.8 percent and butter prices surged 44.2 percent.
The rise in food prices has been outpacing the German general inflation rate for over a year now, partly due to higher electricity prices and rising wages in the food production sector. Dairy products processing is particularly energy intensive because it requires cooling.
In August, prices of electricity for commercial customers climbed 10.7 percent from the previous year.
Overall energy prices, which tend to be volatile, dropped 0.3 percent in August from the prior month and were lower by 2.0 percent from the previous year. Excluding cost of energy, August producer prices fell 0.1 percent from the previous month and climbed 0.1 percent from a year ago.