Germany’s wholesale prices dropped by 1.6% year-on-year in September 2024, marking the steepest decline since April and accelerating from a 1.1% decrease in August. This decline represents the 17th consecutive month of falling wholesale prices, reflecting ongoing deflationary pressures in various key sectors.

Key Drivers of Price Decline

The primary contributors to the steep fall in wholesale prices were significant price reductions across several categories:

• Mineral oil products: Prices plummeted by 14.6%, reflecting lower global oil prices.
• Live animals: Prices dropped by 5.8%, indicating reduced demand or supply chain improvements in the livestock sector.
• Iron, steel, and ferrous metal products: These materials saw a price decline of 5.8%, likely due to weakened industrial demand.
• Computers and peripherals: Prices fell by 5.2%, signaling potential overcapacity or slowing consumer demand in the tech sector.

Sectors with Price Increases

Despite the overall decline, prices rose in several categories, demonstrating resilience in specific goods:

• Coffee, tea, and spices: Prices surged by 24.2%, reflecting supply chain disruptions or increased demand for these commodities.
• Non-ferrous metals: A 15.8% rise was observed, possibly due to supply shortages or increased global demand.
• Sugar and confectionery: Prices grew by 9.4%, indicating volatility in agricultural markets and food production costs.

Monthly Price Trends

On a monthly basis, wholesale prices fell by 0.3% in September, defying expectations of a 0.2% increase. This decline followed a 0.8% drop in August, further signaling weakness in Germany’s wholesale market. The month-over-month reduction reflects sustained challenges in various industries, including energy and raw materials.

Conclusion

Germany’s continued decline in wholesale prices highlights the ongoing deflationary trend affecting key sectors of the economy. While lower prices for energy, metals, and technology goods contributed to this decline, rising costs in food and certain metals present a complex picture. As wholesale prices continue to fall, it may signal broader economic issues such as weakening demand or supply chain adjustments that require close monitoring in the coming months.