Severe inflation
Researchers expect food price shock
02/13/2022 8:53 p.m
According to the Munich-based Ifo Institute, Germans have to adjust to noticeably rising food prices. The reason: Manufacturers have to raise prices because production is becoming more and more expensive. According to the researchers, food is likely to become a key inflation driver.
Groceries are expected to become significantly more expensive in Germany. “According to our surveys, more than two-thirds of food manufacturers are planning further price increases in the coming months,” said Timo Wollmershäuser, head of economic activity at the Munich Ifo Institute, in the “Welt am Sonntag”. That’s more than ever before in reunified Germany. “Thus, food prices are likely to be a key inflation driver this year.”
The economic researchers have therefore upgraded their forecast for the inflation rate in Germany in 2022 to four percent. According to the report, the institute even expects food prices to increase by seven percent compared to the previous year.
The background to this is, among other things, sharply rising costs for producers. As the newspaper reported, citing calculations by the German Farmers’ Association (DBV), the jumps in the prices of fertilizers and fuel alone are causing production costs in arable farming to rise by 20 to 30 percent. Not every farm can or wants to go along with this.
Inflation at its highest level in many years
Ultimately, consumers would feel this. “The price increase in the supermarkets is only just beginning,” said the partner at the consulting company EY and agribusiness officer Christian Janze of the newspaper. “Producer prices are rising sharply, which ultimately has an impact on consumer prices, especially after the next harvest.” A “price shock” is imminent.
Fueled by a further jump in energy prices, consumer prices in Germany rose by 4.9 percent in January compared to the same month last year. In December, the increase was 5.3 percent and thus reached the highest value for almost 30 years. The main reasons for the high inflation are above all increased energy prices and supply bottlenecks, which make the manufacture of products more expensive.