German Producer Prices Accelerated Again in July, Rising 37% on Year

19 Aug 2022

German Producer Prices Accelerated Again in July, Rising 37% on Year

. By Geoffrey Smith -- German industry's problems got a lot worse in July, as energy shortages and lingering post-pandemic effects drove a new surge in producer price inflation.Factory gate prices rose a whopping 5.3% on the month, the biggest single gain since the Federal Republic started compiling its data in 1949. Prices were up 37.2% on the year, badly disappointing hopes for a slowdown to 32.0%.Producer prices typically feed through into consumer prices with a certain time lag. The data thus suggest that the upward momentum in Eurozone inflation is unbroken, despite signs of the economy slowing down."Pipeline pressures are stupendous," said Marc Ostwald, a strategist with ADM ISI in London, via Twitter.Statistics office Destatis said energy prices more than doubled from a year earlier, as Russia throttled supplies of natural gas in response to European sanctions on it for the invasion of Ukraine. In particular, power stations had to pay 234% more than in July 2021 for natural gas, which had to be sourced on the spot market after Russian export monopoly Gazprom (MCX:GAZP) cut shipments to zero for much of the month. They have run at only 20% of their contracted level since the end of scheduled maintenance.In a similar vein, electricity prices for distributors more than tripled. The number was all the more disappointing for the fact that petroleum prices eased significantly in the month, falling 4.3% from June as world crude prices turned lower. However, prices for heating oil, which companies have increasingly used as a substitute for natural gas, were up 108% from a year earlier.Excluding energy prices, Destatis said producer prices rose 0.4% on the month and 14.6% on the year.The numbers offer no relief to the European Central Bank, which has indicated it will raise interest rates aggressively at its meeting next month if the trend in inflation fails to improve. ECB board member Isabel Schnabel told in an interview published on Thursday that "energy prices, particularly gas, and food prices are playing an important role. But it's much broader than that.""If you look at any of our measures of underlying inflation, they are moving up further and stand at historical highs," Schnabel said.

Facebook Comments

You can comment on German Producer Prices Accelerated Again in July, Rising 37% on Year using Facebook here

Disqus Comments

Join the discussion on German Producer Prices Accelerated Again in July, Rising 37% on Year using Disqus