Germany’s producer prices for services in the first quarter of 2023 have decreased by 0.8% compared to the same period in the previous year. This decline can be attributed to significantly falling prices in sea freight, while costs for energy and personnel have increased in various service sectors.
According to the Federal Statistical Office (Destatis), the overall prices for services decreased by 0.6% compared to the fourth quarter of 2022. The decline was primarily driven by the transportation and storage sector, where prices in sea and air freight experienced a significant drop due to plummeting freight rates. However, other service sectors saw notable price increases at the beginning of 2023, mainly due to rising energy and personnel costs.
Within the transportation and storage sector, there was a 7.9% price decrease compared to the previous year, with sea and coastal shipping being the main contributor with a 47.3% decline. The record-high prices during the pandemic due to capacity constraints have sharply fallen due to the economic slowdown and decreased freight rates. Prices in the air transport sector also experienced a decline, albeit by a smaller margin of 0.2% compared to the previous year, with air freight witnessing more significant drops due to declining freight rates.
On the other hand, producer prices for other modes of transportation increased substantially. Rail transport for goods saw a 20.1% rise, while road transport experienced a 12.2% increase compared to the previous year. These increases primarily reflected the persistently high energy prices, with added personnel costs in road transport due to driver shortages.
In the information and communication sector, prices rose by 1.9% compared to the previous year’s first quarter. This moderate increase was mainly driven by cost-related price hikes in information technology services, which saw a 2.2% increase compared to the previous year. Additionally, prices for software development rose by 4.3% at the beginning of the year, while data processing and hosting services experienced a relatively strong increase of 2.9% due to higher energy costs.
Freelance, scientific, and technical services witnessed a significant price increase of 4.9% compared to the previous year’s first quarter. Architecture and engineering services recorded the highest increase of 7.0%, driven by developments in the construction industry and higher construction costs affecting related services.
The sector of administrative and support services saw a price surge of 7.5% compared to the previous year’s first quarter, marking the highest increase since the start of the index in 2015. Cost adjustments at the beginning of the year and the minimum wage hike on October 1, 2022, played a crucial role in the above-average increase compared to the previous year’s quarter. Building cleaning services experienced a 9.8% increase, security services saw an 8.9% rise, and temporary employment witnessed a 6.3% increase.
Overall, the producer prices for services in Germany displayed a varied pattern in the first quarter of 2023, with significant declines in certain sectors such as sea freight but notable increases in others, primarily driven by energy and personnel costs.
https://www.destatis.de/DE/Presse/Pressemitteilungen/2023/06/PD23_234_61311.html