Germany’s industrial sector continues to face pricing pressure, with producer prices for industrial products dropping by 1.
3% year-on-year in June 2025, according to the Federal Statistical Office (Destatis). This marks the latest in a series of monthly declines, reflecting the broader trend of easing industrial costs—particularly in energy.
A significant contributor to this decline was the sharp fall in energy prices, which were down 6.4% compared to June 2024. Electricity prices led the drop with an 8.8% decline, followed by natural gas at 6.9% and mineral oil products at 7.7%. While this offers some relief to manufacturers facing high operating costs, it also highlights the ongoing volatility in the energy sector.
In contrast, prices for capital goods and consumer goods increased during the same period. This suggests that while raw material and energy inputs may be getting cheaper, the final goods being sold are not yet reflecting those savings—pointing to possible margin pressure, supply chain adjustments, or inflationary stickiness in other parts of the economy.
Intermediate goods, which include items like chemicals, metals, and textiles used in further production, recorded a smaller decline of 0.4% year-on-year. Excluding energy, overall producer prices actually rose by 1.3%, underlining the uneven nature of inflation and pricing across different product categories.
The June data continues a downward trend observed over recent months, with producer prices also falling by 1.
2% in May and 0.9% in April. However, despite these headline declines, many German industry leaders remain cautious. Analysts and business groups, including the country’s chemical lobby, do not expect a broad recovery in industrial output before 2026.
These pricing dynamics come at a critical time for Germany’s manufacturing base, which has struggled with weak external demand, high interest rates, and energy costs that—despite softening—remain volatile. The current pattern suggests some temporary relief for manufacturers, but underlying challenges persist.
