German Producer Prices Accelerated Again in July, Rising 37% on Year
2022.08.19 09:50
By Geoffrey Smith
Investing.com — 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%.
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.
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 Reuters 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.
“Pipeline pressures are stupendous,” said Marc Ostwald, a strategist with ADM ISI in London, via Twitter (NYSE:TWTR).
