German May producer prices were unchanged over the month and dropped 3.6% y/y, weaker than our median forecast for a drop of 3.3% y/y. The annual rate was the lowest in over 22 years with lower energy prices still the main driving factor. Prices for heating oil dropped 45.2% y/y in May, while fuel prices were down 21.5% y/y. Mining prices fell 18.7% y/y. Positive base effects will fall out of the equation later in the year and should bring the headline rate up again, even though the current low growth climate should ensure that producer price inflation will remain subdued for some time to come.