Germany's producer price index rose sharply in May

The Federal Statistical Office said that in May 2021, the index of producer prices for industrial products increased by 7.2% compared with May 2020. This was the highest increase compared to the corresponding month of the preceding year since October 2008 (+7.3%), when prices rose strongly before the finance crisis. Economists had expected a 6.4% increase. Compared with the preceding month April 2021 the overall index increased by 1.5% in May 2021. The last time prices rose more compared to the previous month was also in the run-up to the financial and economic crisis in July 2008 (+2.0%). Economists had expected a 0.7% increase.

Mainly responsible for the increase of producer prices compared to May 2020 were the prices of intermediate products and of energy. Prices of intermediate goods increased by 10.7% compared to May 2020. Compared to April 2021 these prices were up 2.2 %.

Energy prices as a whole increased by 14.9% compared to May 2020 and by 2.6 compared to April 2021. The price increase from May 2020 to May 2021 is mainly caused by a base effect resulting from the sharp drop in prices in spring 2020 in the course of the pandemic. National CO2-pricing that has been introduced in January 2021 on several energy products also had a great impact on the price increase of energy. 

The overall index disregarding energy was 4.9% up on May 2020.

Prices of durable consumer goods increased by 1.7% compared to May 2020 (+0.1% compared to April 2021), capital goods, such as machines and vehicles, by 1.2% (+0.2% compared to April 2021).

Prices of non-durable consumer goods increased by 0.5% compared to May 2020 but remained unchanged compared to April 2021. Food prices increased from May 2020 to May 2021 by 0.3.