"We can celebrate tonight because we have done something fantastic. It is too early to say exactly what we'll do. Maybe we won't find anyone who wants to do anything with us."
- Angela Markel, German Chancellor
Change in the price of goods sold by German manufacturers turned into negative territory unexpectedly in August, amid growing uncertainty about the coalition government, German statistics office said Friday. According to Destatis figures, German producer prices fell 0.1% on month in August, at the same pace as in July, while analysts predicted a 0.1% rise. At the same time, priced for industrial products tumbled 0.5% annually, following an increase of 0.5% in the prior month. Prices for non-durable goods inched higher 2.6% year-on-year, while costs of energy dropped 2.0%. It was not a surprise that Angela Merkel's conservative union CDU/CSU won the nation's parliamentary elections, gaining the highest percentage since reunification of Germany in 1990, getting 41.5% of votes, slightly missing an absolute majority. Meanwhile, the opposition left-wing Social Democratic Party received 25.7% of votes. The main disappointment came from Merkel's preferred coalition partner- the Free Democratic Party that received only 4.8%. Even though Merkel secured her third term as German Chancellor, uncertainty is growing around the newly elected government, as people are questioning whether it will be productive due to the changed political line-up. Earlier last week, Merkel already reached an agreement with SDP and the Greens to begin preliminary talks about a possible coalition, however no progress is made so far. Amid these new, companies are cautious in increasing their production, while lower PPI means consumer prices will slow as well.
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