Berlin Surprisingly a harbinger of inflation that is often noticed, German producers raised their prices in May more sharply than they had in about 13 years. Producer prices for commercial products rose 7.2 percent compared to the same month last year, the Federal Statistics Office announced on Friday.
This is the largest increase since October 2008 when prices rose significantly before the financial and economic crisis. Economists polled by Reuters had expected only 6.4 percent, after a 5.2 percent increase in April. Compared to the previous month, prices also rose sharply by 1.5 percent.
In statistics, prices are kept out of the factory – that is, usually before products are processed or put up for sale. You can use it to give an early indication of the development of inflation.
It remains to be seen which of these will reach consumers. Consumer prices rose 2.5 percent in May, stronger than they have been in nearly a decade. “Part of the increase should also reach consumers across the board in the next few months,” said LBBW economist Jens-Oliver Niklasch. “In the second half of the year in particular, we expect a significant increase in economic momentum, as companies will likely have more room to pass.” The Institute for World Economics (IfW) expects inflation to be four decimal places at times.
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The main reasons for the rise in producer prices in May were significantly higher energy and intermediate goods costs. Energy prices rose an average of 14.9%. The main reason for this is “the primary effect due to the sharp drop in prices in the spring of 2020 in the wake of the epidemic,” according to the statistician. German CO2 pricing on fuels such as mineral oil products and natural gas, which has also been incurred in some cases since January, has also had an impact.
Intermediate goods were 10.7 percent more expensive than in May 2020. Increases in secondary mineral raw materials for iron, steel and aluminum scrap (+69.9 percent), but also for sawn and flat timber (+38.4 percent) and metals (+23.1 percent) cent)). “It is likely that the main reasons for the rise in iron and wood prices are increased demand at home and abroad in addition to the problems of supplying raw materials, and in the case of steel prices, there have also been sharp increases in prices,” the Census Bureau explained.
More: Bundesbank President Weidmann calls for an early end to crisis aid.
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