Natural gas cost 125.4 percent more than in February 2021.
(Photo: dpa)
Berlin German manufacturers continue to raise their prices at record speed. Producer prices for industrial products rose by an average of 25.9 percent in February compared to the same month last year. “This was the strongest increase since the survey began in 1949,” said the Federal Statistical Office on Monday.
Economists surveyed by the Reuters news agency had assumed an even stronger increase at 26.2 percent after the rate had been 25 percent in January. Not only energy products, but also many other goods cost significantly more than a year ago – from energy to coffee to butter.
Russia conflict and Ukraine war not yet included
“Recent price trends related to Russia’s attack on Ukraine are not included in the results,” the statisticians said at the same time. The increase is therefore likely to be revised upwards significantly.
In the future, new problems would also arise, explains Alexander Kriwoluzky, head of macroeconomics at the German Institute for Economic Research (DIW): “In addition to the Ukraine war, new supply chain problems will also arise due to the situation in China.” Government’s Covid policy currently back the ships.
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In the statistics, the prices are listed from the factory gate – even before the products are further processed or sold. Producer prices are considered to be an appropriate leading indicator for the inflation rate, which reflects price changes for consumers.
Price increase in Germany is a leading indicator of inflation
The current increase could be reflected particularly clearly in inflation. “Companies will pass on the higher costs to consumers to a greater extent,” says Kriwoluzky. This is currently easier for them because price increases can currently be communicated simply based on the tense world situation.
In their current forecasts for the current year, the economic institutes expect an inflation rate higher than ever before in reunified Germany. The Kiel Institute for the World Economy, the Leibniz Institute for Economic Research (RWI) and the Halle Institute for Economic Research expect inflation to average 5.3 percent.
The early warning system I-Index developed by the TU Dortmund and the Handelsblatt also signals continued high inflation rates in view of the Ukraine war and rising wage demands. DIW economist Kriwoluzky also sees the latter: “I cannot imagine that the trade unions will continue to be cautious about their wage demands. This will further fuel inflation.”
Strong increase in the price of heating oil, electricity and gas
According to the statisticians, the main reason for the sharp rise in producer prices was once again energy. It rose in February by an average of 68 percent. Natural gas cost 125 percent more than in February 2021, electricity two-thirds and light heating oil 57 percent more.
Excluding energy, producer prices were a total of twelve percent higher than the previous year. For food, the premium was 9.2 percent. The prices for untreated vegetable oils (+50.1 percent), butter (+64.4 percent) and coffee (+16.9 percent) rose particularly sharply.
with agency material
More: The I-Index – The New Measurement of Inflation