German import prices see record drop

During October, Germany’s import price inflation fell as a result of falling energy prices, as figures from the Federal Statistics Office revealed a 2.9 percent fall and represents the lowest year-on-year rate since 2007.

With falls in commodity prices being as a result of the fall in global world growth, inflationary pressures have fallen which has meant that the European Central Bank will have greater room to take action by cutting interest rates further next week.

German industrial production is at its lowest ebb in 14 years as assessed in September, whilst business confidence is also struggling as the Ifo research institute measured this month.

The euro has fallen by 19 percent against the dollar over the last four months and imports have become more expensive, so the fall in domestic growth and the reduced global demand has left German manufacturing in a very difficult state.

It is hoped that the financial stimulus package that is being thrashed out by the EU, as well as the plan that German Chancellor, Angela Merkel, has announced will pick up the economy and sustain domestic demand until the current financial turmoil passes.

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