Economists were surprised by the strength of producer-level inflation.
(Photo: dpa)
Frankfurt The German manufacturers surprisingly raised their prices in August to an unprecedented extent due to the enormously high oil, gas and electricity costs. Producer prices rose by an average of 45.8 percent, as reported by the Federal Statistical Office on Tuesday. This was “the highest increase compared to the same month last year since the survey began in 1949”. This far exceeded the previous record value of 37.2 percent, which was reached in July.
That comes as a surprise: economists surveyed by the Reuters news agency had expected a decline to 37.1 percent. Producer prices increased by 7.9 percent from July to August. “This is also the highest increase compared to the previous month since the beginning of the survey,” it said.
Economists were surprised by the strength of producer-level inflation. “An unbelievable price hammer,” commented LBBW economist Jens-Oliver Niklasch on the development. “None of this bodes well for inflation. It’s here to stay.” Producer prices are considered to be the forerunners for the development of general inflation.
In the statistics, the prices are listed from the factory gate – even before the products are further processed or sold. In August, consumer prices were 7.9 percent higher than a year earlier. The Bundesbank expects a further boost in September with the expiry of the 9-euro ticket and the tank discount. The inflation rate is likely to “advance into the double digits in the next few months”.
Top jobs of the day
Find the best jobs now and
be notified by email.
The main reason for the sharp rise in producer-level inflation is energy, which has cost significantly more since the start of Russia’s invasion of Ukraine on February 24th. Producer prices here were 139.0 percent higher than in August 2021. Natural gas cost more than three times as much as a year earlier (+209.4 percent), and electricity was even more expensive by 278.3 percent.
37.0 percent more was required for petroleum products. Light heating oil was more than twice as expensive as a year earlier (+104.0 percent), while motor fuels were 27.3 percent more expensive. Food prices rose by an average of 22.3 percent.
More: For many Germans, the dream of owning their own home is over.