Each time they telegraph a worse situation for the country and, therefore, for the eurozone. The Producer Price Index (PPI) shot up in August much more than expected by analysts. The indicator registered an increase of 7.9% month-on-month compared to the 1.6% expected and 5.3% in July. In the year-on-year calculation, the increase was 45.8% compared to the estimated 37.1% and .
As reported by the Federal Statistical Office (Destatis), this was the highest year-on-year increase since the survey began in 1949. This is also the highest monthly increase since the survey began. ‘Pot of cold water’ for those who want to see, with the relief of strained supply chains after the pandemic, a respite in inflationary pressures. .
The PPI is an inflation indicator that measures the average change in sales prices received by domestic producers of goods and services. The index measures price change from a seller’s perspective by examining three production areas based on industry, commodity, and processing-stage grassroots companies.
“The main reason for the increase in commercial producer prices compared to the previous year continues to be the evolution of energy prices, due to the high weighting of the energy price index in the general index, combined with changes in exceptionally high prices In addition, partly as a consequence of increases in the prices of energy, intermediate goods (+17.5%), capital goods (+7.8%) and durable and non-consumer goods durable goods (10.9% and 16.9%) also increased significantly,” Destatis said in its statement.
The German statistical agency highlights that energy prices in August 2022 were on average 139% higher than in the same month last year. Compared to July 2022 alone, these prices increased by 20.4%. The increases in the price of electricity were the ones that had the greatest impact on the interannual variation rate of energy, with an increase of 174.9%. Special mention deserves electricity, which cost 278.3% more for redistributors than a year before and 195.6% for customers with special contracts.
The report also notes that the prices of consumer goods in August 2022 were 16.9% higher than in August 2021 and increased by 0.8% compared to July 2022. Food was 22.3 % more expensive than last year. Prices for butter (+74.6% compared to August 2021) and untreated vegetable oils (+51.4%) increased particularly strongly. Liquid milk cost 35.3% more than in August 2021, coffee was 32.5% more expensive than a year ago. Meat, not including poultry, cost 27.5% more than a year earlier.
Likewise, the prices of durable goods were 10.9% higher in August 2022 than a year earlier, mainly due to the evolution of furniture prices (+13.2%).
All these data send a clear message to a European Central Bank (ECB) in an unenviable position. Inflationary pressures continue to be ‘red hot’ in the eurozone and data like this increases them. Even more so when it occurs in the considered ‘locomotive’ of the eurozone and in a country quite fearful of inflation.
The president of the German central bank (Bundesbank), Joachim Nagel, also a member of the ECB, has once again insisted on rate hikes, spurring the central bank’s ‘hawk’ sentiment. “If the trend in the data continues, interest rates will have to be raised further, something that has already been agreed upon in the Governing Council,” he said on Sunday. , he remarked.
In the September bulletin, published on Monday, Bundesbank economists see increasing signs of what they see as “a notable, broad-based and long-lasting decline in economic output.” For this reason, they forecast that Germany’s real gross domestic product (GDP) will drop somewhat in the third quarter and notably in the winter semester, which corresponds to the fourth quarter of 2022 and the first quarter of 2023. The reason, add the economists of the Bundesbank, is above all “the tense situation in the energy supply due to the Russian war against Ukraine.”
At the same time, they forecast inflation in the double digits, ie 10% or more, in the coming months in Germany. For now, Germany has contained the rise in consumer prices, which, with subsidies for public transport and fuel, which no longer apply since September 1.
For this reason, inflation will rise more in the coming months because other support measures announced by the German government will have an effect on consumer prices at the beginning of next year.
Facebook Comments
Disqus