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Producer prices with the strongest increase since 1951

Status: 19.11.2021 12:17 p.m.

Producer prices, which are seen as an indicator of inflation, remain on the hunt for records. In October alone they shot up by more than 18 percent – more than in the oil crisis.

The rise in prices in Germany continues: In October the prices for commercial products climbed more strongly than they have been in 70 years. Compared to the same month last year, producer prices have risen by 18.4 percent, the Federal Statistical Office announced today. That is the strongest increase since November 1951.

Also compared to the previous month of September, the commercial producer prices recorded an increase of 3.8 percent. Producer prices are seen as a leading indicator of the development of inflation, which is currently as high as it was 28 years ago.

Above all, energy, wood and metal are more expensive

The main driver for the development was the jump in energy prices, which rose by an average of 48.2 percent in October compared to the same month of the previous year. Compared to the previous month alone, energy prices rose by a good twelve percent. The price of natural gas (plus 81.4 percent) and electricity (49.6 percent) rose particularly sharply.

In addition, many intermediate goods such as wood and metal cost significantly more with an increase of around 18 percent. The reasons for this are numerous tensions in the international trade in goods, most of which can be traced back to the corona pandemic. The prices for non-metallic secondary raw materials (plus 95.7 percent), sawn coniferous timber (plus 91.8 percent) and wooden packaging materials (plus 82 percent) rose the most.

What will happen to inflation?

In the statistics, the producer 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 is currently higher than it has been since 1993 and well above the target of two percent. According to economists, it could move towards five percent by the end of the year. The European Central Bank (ECB) considers the inflation rate to be a temporary situation and expects a decrease in the course of the coming year.

Inflation at the consumer price level is unlikely to fall as quickly as the ECB currently expects, said LBBW analyst Niklasch. He assumes 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.”

The statisticians stated: “The main reason for the increase in commercial producer prices compared to October 2020 was the price development for energy.” It went up 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.

Reference-www.tagesschau.de

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