A sharp decline in import prices hits Germany with the largest recession in decades

The rate of decline in import prices in Germany during last June exceeded 11%, marking the largest decrease in this indicator since September 2009. This significant drop followed a 9.1% decrease in the previous month of May.

It is worth mentioning that import prices to Germany have increased by over 30% in some cases during the past year. This rise is primarily attributed to the disruptions caused by the Russian war in Ukraine, which led to a significant increase in energy and raw material costs.

The current decline in import prices is attributed to a fundamental impact resulting from the high prices recorded in the previous period, making the current difference stand out compared to the elevated price levels from before.

This effect is clearly manifested in energy prices, which decreased by 44.9% in June compared to the same month last year. Natural gas import prices also declined by 50% on an annual basis and 15.5% on a monthly basis.

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The import prices directly affect consumer prices, a factor that the European Central Bank considers in designing its monetary policy. To tackle high inflation, the European Central Bank has significantly raised its key interest rates since the summer of 2022.

However, in recent times, the bank has increasingly been considering current economic developments to determine its future monetary policy, leading to a reduction in its expectations regarding potential interest rates in the future.

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