German wholesale prices fell by 8% in March from the same month a year earlier, the sharpest fall since 1987, official data show today.
Compared with February, wholesale prices slipped by 0.9% in Europe's biggest economy, national statistics service Destatis added.
The drop resulted mainly from sharply lower prices for fuels and mineral oil products, which cost an average of 21.4% less in March than a year earlier.
Prices of minerals, metals and semi-finished metal products were 17.8% lower on the year, while cereals, seeds and animal feed shed a remarkable 42.6%, the data showed.
The fall over 12 months was the biggest since January 1987, when the wholesale price index shed 8.6%, the Destatis service said.
Earlier this month, International Monetary Fund head Dominique Strauss-Kahn said there was a near-term risk of deflation, a sustained drop in prices which is dangerous because it curbs production and can lead to job losses.
According to the Standard and Poor's financial research company, Ireland, Britain and Spain are the countries most threatened by deflation in Europe.
Figures released last week showed that German consumer prices had gained just 0.5% in March on a 12-month basis, providing further evidence of falling inflation throughout the 16-nation euro zone.
That would give the European Central Bank leeway to cut its main interest rate in early May from the current record low of 1.25%.
Meanwhile, Spain recorded in March its first ever decline in annual inflation since records began, data confirmed today.
Consumer prices declined 0.1% in March compared with a year earlier as Spain struggles with its first recession in over a decade which has led to a sharp decline in consumer demand, national statistics institute INE said.
It was the first annual decline in prices since INE started tracking inflation in 1961.
