Germany's producer prices for industrial products in September 2025 fell by 1.7 percent compared with the same month in 2024, reflecting continued downward pressure from the energy sector. The decline was less severe than August's 2.2 percent drop, suggesting gradual price stabilisation. Energy prices remained the main driver of this decrease, falling by 7.3 percent year-over-year, with sharp declines in natural gas (minus 10.7 percent) and electricity (minus 10.2 percent). However, heating oil and motor fuel recorded modest price increases, reflecting shifting global energy costs.

Excluding energy, producer prices rose by 0.9 percent, underscoring inflationary trends in other sectors. Capital goods and consumer goods both saw price growth, with non-durable goods up by 3.2 percent and durable goods by 1.8 percent, driven largely by higher costs of beef (34.8 percent) and coffee (27.6 percent). Meanwhile, intermediate goods were 0.9 percent cheaper than a year earlier due to falling prices for basic chemicals and steel.

Interestingly, while metals such as steel became cheaper, precious metals experienced sharp gains, with gold (31.4 percent), platinum (24.2 percent), and silver (22.5 percent) showing strong investor demand. In summary, the latest update reveals a dual narrative of declining energy costs easing industrial inflation, alongside selective price pressures in consumer and capital goods, signalling mixed cost dynamics within Germany's industrial sector. These updates take the RPI and RPI-P to minus 21, indicating that economic activities are now underperforming compared to expectations.

Wholesale prices are seen up 0.2 percent on the month and down 1.5 percent on year in September after slipping by 0.5 percent on the month and declining 2.2 percent on year in August.

The Producer Price Index (PPI) measures the price of industrial and commercial goods produced and sold domestically (excluding turnover tax). About 1,250 types of goods are used to calculate the index and prices are reported by a total of 5,000 enterprises under fixed contractual conditions. Changes in the index provide a guide to inflation from the point of view of the product's producer/manufacturer and, in contrast to the consumer price index (CPI), excludes VAT and other deductible taxed associated with turnover.

The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the consumer price index (CPI).

Because the index of producer prices measures price changes at an early stage in the economic process, it can serve as an indicator of future inflation trends. The producer price index and its sub-indexes are often used in business contracts for the adjustment of recurring payments. They also are used to deflate other values of economic statistics like the production index. It should be noted that the PPI excludes construction. These price statistics cover both the sales of industrial products to domestic buyers at different stages in the economic process and the sales between industrial enterprises.

The PPI provides a key measure of inflation alongside the consumer price indexes and GDP deflators. The PPI is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or they taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.

The bond market rallies when the PPI decreases or posts only small increases, but bond prices fall when the PPI posts larger-than-expected gains. The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.