| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.2% | 0.0% to 0.3% | 0.1% | -0.1% |
| Year over Year | -1.7% | -1.8% to -1.6% | -1.8% | -1.7% |
Highlights
The October 2025 producer price report presents a mixed inflation landscape shaped largely by energy dynamics. Producer prices fell 1.8 percent year-over-year, marking the eighth consecutive annual decline, yet nudged up slightly by 0.1 percent on the month. The persistent downward pressure stems mainly from energy, where prices were 7.5 percent lower than a year earlier, driven by sharp reductions in natural gas and electricity. Once energy is excluded, the trend shifts as producer prices actually rose 0.8 percent year-on-year, suggesting underlying cost pressures remain active across the industrial sector.
Consumer-facing categories tell a very different story. Capital goods became 1.9 percent more expensive, reflecting higher machinery and vehicle costs, while non-durable goods rose 2.3 percent largely because of food inflation. The food category itself shows extreme divergence, with steep increases in beef and coffee contrasting sharply with deep price drops in butter and sugar. Durable consumer goods also edged higher by 1.7 percent, signalling steady demand resilience.
Intermediate goods continue to split in two directions. Chemicals, paper, and animal feed became cheaper, yet metalsespecially precious metalssurged, with gold prices up an extraordinary 43 percent year-on-year. Wood products and glass also recorded notable increases. Overall, the data reveal a production environment where cheap energy masks pockets of strong cost escalation, hinting at uneven pressure points across Germany's industrial supply chain. These updates take the RPI to minus 6 and the RPI-P to minus 4, indicating that economic activity continues to trend within expectations for the German economy.
Market Consensus Before Announcement
Wholesale prices are seen up 0.2 percent on the month and down 1.7 percent on year in October after slipping by 0.1 percent on the month and declining the same 1.7 percent on year in September.
Definition
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.
Description
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.