Friday 19th November 2021
Highest increase since 1951
The harbinger of inflation is on the hunt for records
The prices of commercial products rose more sharply in October than they have been in 70 years. The main cause of the development are sharp jumps in energy prices.
The prices of German manufacturers are currently rising more sharply than they have been since November 1951, primarily because of expensive energy. The producer prices of commercial products climbed in October by 18.4 percent compared to the same month last year and thus continue to shimmy from record to record, as the Federal Statistical Office announced.
The increases are already stronger than in the first oil crisis in 1974. “That was once again considerably above the worst fears,” said LBBW expert Jens-Oliver Niklasch. Economists had only expected 16.2 percent, after plus 14.2 percent in September. In addition to energy, primary products such as wood and metals became more expensive.
The producer prices are considered to be the precursors for the development of inflation. In the statistics, the prices are kept from the factory gate – i.e. before the products are further processed or go on sale. You can use it to give an early indication of the development of consumer prices. At 4.5 percent, the inflation rate in Germany is currently higher than it has been since 1993 and, according to economists, could move towards five percent by the end of the year.
Natural gas more than 80 percent more expensive
Inflation at the consumer price level is unlikely to fall as quickly as the European Central Bank (ECB) currently expects, said LBBW analyst Niklasch. He is assuming that the companies will pass on at least part of the resulting costs to the end consumer. “Inflation should therefore remain a dominant topic in 2022 as well.” Commerzbank expert Ralph Solveen sees it similarly: “In view of the significantly more expensive intermediate products, the prices of consumer and capital goods should continue to rise in the coming months.” This is reflected in consumer prices.
According to statisticians, energy was again primarily responsible for the rise in producer prices within the year. It rose in October by an average of 48.2 percent, compared to the previous month by a good twelve percent. If energy is excluded, the total producer prices were only 9.2 percent above the previous year. “In October the price jump was exorbitant, especially for gas and electricity,” said chief economist Uwe Dürkop from the Berliner Sparkasse. Natural gas rose in price by a good 81 percent, and electricity by almost 50 percent.
Intermediate goods cost 18 percent more than a year ago, metals rose significantly by almost 38 percent. The prices for sawn coniferous timber rose by almost 92 percent and for wooden packaging by 82 percent. Fertilizer and feed for farm animals also cost noticeably more. In addition, the prices of consumer goods rose, especially food. The prices for vegetable, untreated oils (plus 48.3 percent), butter (plus 18.8 percent) and beef (plus 14.2 percent) rose particularly sharply.