German Producer Prices Drop 7.6 Percent

FRANKFURT (AP) -- German producer prices fell 7.6 percent in the year to October, due mainly to cheaper fuel and energy, but were unchanged from September, official data showed Friday.

Producer prices -- the cost of items at the factory gates -- are watched as an early indicator of consumer price inflation as they affect the cost of manufacturing goods.

The Federal Statistical Office in Wiesbaden said natural gas was nearly 40 percent cheaper and oil-based fuels were 12 percent cheaper in October 2009 compared with October 2008. Electricity prices were about 10 percent lower.

Metal prices were down almost 18 percent, while prices for components for manufacturing were 6 percent lower.

Food prices fell 6 percent, largely due to a steep 22 percent drop in the price of dairy products.

In September, producer prices had also shown a 7.6 percent annual decline.