Producer prices rise faster than economists expected
4 min read
Price rises among German manufacturers have exceeded economists’ expectations. Suppliers and energy-intensive businesses face sharply higher energy and metal costs, while food prices are falling year on year.
Key takeaways
- The Federal Statistical Office reported a 4.6% year-on-year rise in producer prices for August 2026. Economists had expected 4.1% on average, leaving purchasing departments negotiating from a higher base than planned.
- Energy prices rose by 8.3%; excluding energy, the increase was just 3.1%. Businesses budgeting on the rate excluding energy underestimate their own energy bills.
- Metals cost 14.8% more than a year earlier, machinery just 2.0%. Machinery manufacturers and automotive suppliers thus face material costs rising faster than their selling prices.
- Non-durable consumer goods became 2.0% cheaper, with food costing 4.3% less than in August 2025. Bakeries, meat processors and retailers can therefore buy these goods more cheaply than a year ago.
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What are producer prices? The index measures what Germany’s mining, manufacturing, energy and water industries charge for products sold domestically. It excludes VAT (value added tax). Prices are recorded on the 15th of the reporting month, with 2021 as the base year. The figure captures an early stage of pricing, before goods reach shop shelves.
The increase exceeds expectations
The Federal Statistical Office published industrial producer prices for August 2026 on 18 September. Prices were 4.6% above their August 2025 level. Economists had expected 4.1% on average, according to the Anadolu Agency’s report on the release date.
Prices also rose faster than expected compared with July. The monthly increase was 1.1%, against an expected 0.6%, making it almost twice the forecast.
Energy drives prices up, non-durables temper the rise
The annual increase varies across products. Energy prices rose by 8.3%, while intermediate goods rose by 6.1%. Intermediate goods are materials and components manufacturers buy and process for their own production.
Excluding energy, prices rose 3.1% year on year and 0.2% month on month. The gap with the headline figure shows how strongly oil and gas shape the overall trend. The following breakdown compares the main components of the August figure.
| Measure | August 2026, year on year |
|---|---|
| Producer prices overall | up 4.6% |
| Excluding energy | up 3.1% |
| Energy | up 8.3% |
| Intermediate goods | up 6.1% |
| Non-durable consumer goods | down 2.0% |
Source: Destatis, press release 328 of 18 September 2026, Producer prices in August 2026.
Destatis cites Iran as the cause
Destatis attributes high oil prices to hostilities in Iran and the Middle East. Energy prices rose 3.2% from July, with petroleum products alone up 4.9%.
Light heating oil and naphtha recorded the largest annual increases. The chemical industry buys naphtha as a feedstock. Fuel prices are also far above their year-earlier levels.
Gas prices rise faster than electricity prices
Increases in electricity and gas prices were more moderate than for oil. Distributed natural gas cost 7.5% more year on year across all customer groups, while electricity rose 1.7%. The gas figure covers everyone from households to industry. Manufacturers using gas therefore face costs rising much faster than businesses relying solely on electricity.
Only district heating cost less than in August 2025, albeit marginally. The following table shows the changes for each energy category.
| Energy category | August 2026, year on year |
|---|---|
| Petroleum products | up 40.5% |
| Light heating oil | up 65.3% |
| Fuels | up 37.7% |
| Naphtha | up 44.4% |
| Distributed natural gas | up 7.5% |
| Electricity | up 1.7% |
| District heating | down 0.5% |
Source: Destatis, press release 328 of 18 September 2026, petroleum products section.
Metals rise 14.8%, machinery just 2.0%
Metals, which cost 14.8% more year on year, account for much of the increase in intermediate goods. These include pig iron and steel, copper and semi-finished copper products. Machinery prices, meanwhile, rose just 2.0%. Machinery manufacturers and automotive suppliers therefore face material costs rising much faster than their own selling prices.
Increases are smaller on the sales side. Capital goods overall rose just 2.4%, while durable consumer goods rose 2.1%.
Food becomes cheaper
Non-durable consumer goods are moving in the opposite direction, the only main category below its year-earlier level. Food cost 4.3% less than in August 2025, falling more sharply than the category overall.
Butter stands out: it cost 40.5% less than in August 2025. Pork prices fell 16.3%.
Whether hostilities will keep driving oil prices higher in September remains unclear. The Federal Statistical Office’s next monthly release will show whether the divergence between energy and food persists.
Frequently asked questions
Does the index also measure export prices?
The index covers only products sold domestically by Germany’s mining, manufacturing, energy and water industries. It excludes export prices, so the figure provides no direct insight into export business.
Why does the rate excluding energy differ from the headline figure?
Destatis also publishes a figure excluding energy. The difference between the two measures captures the influence of oil and gas prices on the headline figure. For index-linked contracts, choosing between these rates makes a substantial difference.
Where does the forecast used for comparison come from?
The benchmark is a consensus of economists’ forecasts compiled by the Anadolu Agency when the figures were released. A consensus combines estimates from different organisations, so individual institutions’ forecasts sit above or below the average. No official body sets this figure.
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Translated from the German original using artificial intelligence. The German version is authoritative.
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