From June 2022 to June 2023, the prices of producer goods—sold to companies and agencies which produce consumer goods and services, or to other firms producing other producer goods—have dropped or been flat in the world’s largest economies, except that of Japan. Germany, forced by British-U.S. war policy into an accelerating deindustrialization, is the “leader” in this; German industry’s producer goods prices in June were down a very large 14% since September, 2022. Producer prices of Italian industry were down 13% in June from December, 2022; those of the U.K., down 2.7% year-to-year in June; those of French industry were flat for the year in June, but declining every month since October 2022.
U.S. producer prices in June were essentially flat for the year (up 0.24%), as were those of South Korea. Producer prices of Brazilian industry were down 9.5% year-to-year in June; those of India, down 4% for the year to June; and those of China, down a full 10.8% for the year. (The indices are found on Bloomberg, TradingEconomics.com and Moody’s Analytics.)
This producer price deflation shows the shrinkage of industrial demand around the world, especially in Europe, despite the huge and rapidly increasing U.S. defense budget, and the big increases in war spending across Europe. This producer-price deflation will be feeding into consumer goods prices and prices for services in the areas of trade logistics, warehousing, transportation, etc.
Shrinkage of demand in contracting European economies will export deflation to both China and the United States. Deflation will bring the threat of falling business investment, employment and wages; credit crunches; and deepening austerity which will be difficult to reverse.
