Producer prices in Germany rose at the fastest pace in 3 and a half years during September

Producer prices in Germany rose during September at their fastest pace in three and a half years, according to what the German Federal Statistical Office announced on Tuesday, driven by rising energy prices as a result of the conflict in the Middle East.

The prices that manufacturers charge for goods, ranging from foodstuffs to industrial products, increased by 6.7 percent on an annual basis, exceeding the expectations of analysts polled by Reuters for an increase of 6.2 percent.

The increase recorded the strongest pace since March 2023, accelerating from 4.6 percent in August.

“Price pressures remain significant in the initial stages of the production chain,” said Alexander Krueger, chief economist at Bitman Hall Bank.

Kruger expected the annual inflation rate of producer prices to rise to about 10 percent, adding: “This is likely to lead, sooner or later, to a rise in consumer prices as well.”

On a monthly basis, producer prices rose by 1.9 percent.

Producer prices measure the costs of goods as they leave factories, before they reach wholesalers and retailers, and are an early indicator of future inflation trends.

The increase was mainly driven by an increase in energy prices by 14.9 percent on an annual basis, while the prices of intermediate goods rose by 6.4 percent.

George Al-Hadiri, CEO of HSBC Group, said on Tuesday that investing in alternative logistical routes in the Gulf region - with the aim of mitigating the repercussions of the war in which Iran is participating - may make the Strait of Hormuz “unnecessary” during the next five years.

The conflict has highlighted the world's heavy dependence on this strategic waterway, through which a fifth of the world's oil and liquefied natural gas trade previously passed.

This situation pushes the Gulf countries to direct their resources towards developing energy pipelines that reach ports. These are investments that Al-Hudayri believes will enable the region to overcome the repercussions of the conflict.

The bank’s CEO said, during an event organized by HSBC in Dubai: “We see that this region is capable of recovering and continuing to grow, which will require huge investments.” He added: “Of course, we wish and hope for a solution to the conflict... but the Strait of Hormuz may, perhaps within 5 years, become unnecessary.”

In a report issued on Monday, HSBC Bank stated - based on data from the MEED platform specializing in construction market information - that the Middle East, North Africa and Turkey region is offering project packages worth $872 billion, and that it is part of a broader infrastructure plan worth $1.4 trillion whose contracts have not yet been awarded.

On the other hand, a recent survey conducted by HSBC, which included more than 1,600 business leaders and about 820 global institutional investors, showed that they still consider the Gulf region an attractive investment center.

However, in a report issued last week, the World Bank expected a sharp economic contraction of 1.3 percent this year in the Middle East, North Africa and Pakistan region - after an expected growth of 3.3 percent in 2025 - due to the ongoing war. A strong recovery is expected to follow; Albeit asymmetrically, in 2027.

The real estate price index in Saudi Arabia rose by 1.2 percent during the third quarter of 2026, on an annual basis, driven by an increase in the prices of the residential and agricultural sectors, despite the decline in commercial real estate prices, according to the data contained in the index.

Residential sector prices increased by 2.3 percent on an annual basis, while agricultural sector prices increased by 3.9 percent. In contrast, commercial sector prices fell by 2 percent.

The rise in the residential sector was driven by an increase in the prices of residential lands by 4.9 percent, apartments by 1.7 percent, and residential floors by 0.8 percent, while villa prices decreased by 7.7 percent.

In the agricultural sector, land prices rose by 3.9 percent year-on-year, while commercial land prices fell by 2.1 percent, buildings by 1.4 percent, and showrooms and shops by 0.9 percent.

Quarterly decline

On a quarterly basis, the real estate price index decreased compared to the second quarter of 2026, affected by the decline in prices of the residential and commercial sectors.

Residential sector prices decreased by 1.5 percent, as a result of a decline in the prices of residential lands by 2.1 percent, apartments by 0.5 percent, and villas by 0.4 percent, while prices of residential floors increased by 1 percent.

Commercial sector prices also declined by 0.3 percent, affected by a decrease in the prices of commercial lands by 0.4 percent, and exhibitions and shops by 1.7 percent. On the other hand, building prices increased by 0.2 percent.

On the other hand, agricultural sector real estate prices increased by 0.2 percent, compared to the second quarter, driven by an increase in agricultural land prices by the same percentage.

Riyadh records an annual increase

At the level of administrative regions, real estate prices in the Riyadh region increased by 4.6 percent on an annual basis during the third quarter of 2026.

The northern border recorded the highest rate of increase among regions at 12 percent, followed by Medina with 0.3 percent.

On the other hand, the Asir region topped the regions with the most decline in real estate prices, with a decrease of 4.3 percent, followed by Hail by 3.8 percent, then the Eastern Province by 3.7 percent, and Al-Jawf by 2.8 percent.