Tuesday, July 20, 2021
Prices go up 8.5 percent
Inflation barometer as high as it was last in 1982
The prices of German producers are rising faster than they have been in four decades. These are the prices for products before they are further processed and before they go on sale. They are regarded as leading indicators for the development of inflation. The main reasons are the CO2 price and the pandemic.
German producers raised their prices more sharply in June than they have done in nearly four decades. The producer prices of commercial products rose by 8.5 percent compared to the same month last year, as the Federal Statistical Office announced. Economists polled by Reuters had expected 8.4 percent, after the rate of increase in May had been 7.2 percent. The last time there was a bigger plus was in January 1982, when prices rose sharply due to the second oil crisis.
The producer prices are considered to be a leading indicator for the development of inflation. In the statistics, the prices are kept ex-factory – i.e. usually 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. These had risen by 2.3 percent in June, and by 2.5 percent in May, as much as it had not been for nearly ten years.
Energy is becoming significantly more expensive – prices collapsed beforehand
The main reason for the rise in producer prices last month was significantly higher costs for energy and intermediate goods. Energy prices rose by an average of 16.9 percent. The main reason for this is a “base effect due to the sharp fall in prices in spring 2020 in the wake of the pandemic,” according to the statistician. The German CO2 pricing on fuels such as mineral oil products and natural gas, which has also been incurred in some cases since January, also had an impact.
Intermediate goods were 12.7 percent more expensive, with steel and wood prices rising particularly sharply due to the high demand at home and abroad as well as problems in the supply of raw materials. In the case of steel, there were also strong price increases for iron ore imports.
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