German producer prices saw an average annual decline of 1.2% in 2025, once again exhibiting a decline for a second year running. However, there is a caveat to that figure with it being a case largely owing to a steep decline in energy prices.
Of note, energy prices showed a drop of 6.2% compared to the previous year. The breakdown shows that natural gas distribution was 8.3% cheaper on average in 2025 than in 2024, electricity 7.5% cheaper, and petroleum products 5.5% cheaper.
If you strip out energy price developments, German producer prices were actually up by 1.2% instead in 2025 compared to the previous year.
The more detailed breakdown elsewhere shows intermediate goods were on average 0.3% cheaper in 2025 than in 2024. Meanwhile, the prices for capital goods were on average 1.9% higher, with consumer goods on average 2.7% more expensive in 2025 compared to the year before.
The story here is somewhat similar to what we’ve seen with Germany’s consumer price index progression. That being headline annual inflation reflecting a decline that is seen nudging closer to the pivotal 2% mark. However, core annual inflation is still keeping more stubborn and holding above the 2% threshold.
The latter continues to be a thorn in the side of the ECB, preventing the central bank from following through on easing monetary policy further since the closing stages of last year.
