FX.co ★ German Producer Prices Drop the Most in 20 Months

In December 2025, Germany witnessed a 2.5% year-on-year decline in producer prices, following a 2.3% decrease in November and aligning closely with market forecasts of a 2.4% drop. This represents the tenth successive month of annual declines in producer prices and is the most significant reduction since April 2024. The primary factor in this decline was reduced energy costs, which decreased by 9.7%. Within the energy sector, noteworthy declines were observed in natural gas (down 14.6%), electricity (down 11.1%), mineral oil products (down 6.6%), and district heating (down 0.2%). When excluding energy, producer prices actually increased by 0.9%, following a 0.8% rise in November. Conversely, there were price hikes recorded in several segments: non-durable consumer goods saw a 0.6% increase, durable consumer goods went up by 1.8%, and capital goods rose by 2.0%. Intermediate goods also experienced a price rise of 0.3%, driven by an uptick in metal prices. On a monthly basis, the producer price index decreased by 0.2% in December, aligning with forecasts, after remaining unchanged in November; this marks the first monthly decrease in three months. For the entirety of 2025, the average deflation in producer prices stood at 1.2%.