Lower energy costs push down German producer prices

The decline in Germany’s producer prices in May accelerated due to lower energy costs, with industrial products costing 1.2% less year on year, the Federal Statistical Office said on Friday.

This is the third price dampening in a row, with the decrease growing successively each month, as the analysts had predicted.

“In May 2025, lower energy prices were the main reason for the year-on-year decline in producer prices. Intermediate goods were also less expensive than a year earlier,” Destatis said.

Energy costs were 6.7% cheaper than a year ago, down 0.9% since April.

The statisticians cited a 7.1% year-on-year drop in the price of natural gas, while electricity prices fell even more sharply.

“Across all customer groups, electricity prices declined by 8.1% compared with May 2024,” the report said.

However, the war between Israel and Iran is causing oil prices in particular to rise significantly again.

The price of a barrel of Brent crude was still below $70 before the escalation of hostilities one week ago, but since rose above $77 per barrel.

Natural gas prices have also risen sharply since Israel’s attack on Iran and the retaliatory strikes by Tehran, which will likely impact energy prices overall in June.

The producer price index for industrial products tracks prices for products in the mining, manufacturing, energy and water sectors in Germany that are sold domestically.

It tends to have an impact on overall consumer prices and the inflation rate, on which the European Central Bank bases its monetary policy.

Source: dpa

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