Surprising decline
Producer prices are falling – food is also cheaper
March 20, 2024, 11:38 a.m
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High food costs have been a burden on many households for years. But there is now at least a trend reversal: prices have recently fallen again for the first time in a year-on-year comparison. Overall, producer prices continue to develop positively for consumers.
German producer prices fell surprisingly significantly in February, partly due to cheaper food. Manufacturers of commercial products – from gasoline to coffee – charged an average of 4.1 percent less than a year earlier, as the Federal Statistical Office announced. This was the eighth decline in a row. Economists surveyed by the Reuters news agency had only expected a decline of 3.8 percent, after an even more significant decline of 4.4 percent in January and 5.1 percent in December.
From January to February, prices also fell by 0.4 percent. Only a minus of 0.1 percent was expected here. For the first time in almost three years, food costs less than a year earlier: it fell by an average of 0.8 percent.
Untreated vegetable oils in particular were cheaper (-19.4 percent). Milk prices fell by 11.8 percent and coffee prices by 9.7 percent. Confectionery rose in price by 12.9 percent and butter by 5.6 percent.
Falling energy prices also depress producer prices
“The main reason for the decline in producer prices compared to the same month last year was the decline in energy prices in February 2024,” emphasized the statisticians. This fell by 10.1 percent compared to February 2023. Electricity prices fell by 16.8 percent and gas prices by as much as 17.7 percent. Light heating oil, on the other hand, cost 1.6 percent more than a year earlier, while fuels such as gasoline were 1.4 percent cheaper.
The development is good news for consumers: the prices for products are recorded in the statistics before they are further processed or go on sale. They therefore allow early conclusions to be drawn about the development of consumer prices. These only increased by 2.5 percent in February – that is the lowest inflation rate since June 2021.