Energy and food drive inflation: Inflation rate rises to 7.9 percent in August

20 Sep 2022 5:45 p.m

Producer prices, which are used as an indicator of consumer price developments, experienced a record increase in August. Fueled by high energy costs, prices for commercial products rose by 45.8 percent compared to the same month last year.

By Desiree Lambert

In the past month, German manufacturers have asked higher prices for their products than ever before because of high oil, gas and electricity costs. As the Federal Statistical Office announced on Tuesday, producer prices rose by an average of 45.8 percent compared to the same month last year. This was “the highest increase compared to the same month last year since the survey began in 1949”. Compared to the previous month, they increased by 7.9 percent. In the statistics, the prices for the manufacturing industry and products sold domestically are listed ex works.

The enormous increase surprised even economists who had previously assumed that producer prices would fall by 37.1 percent. “An incredible price hammer,” said Jens-Oliver Niklasch, economist at Landesbank Baden-Württemberg (LBBW), the news magazine T-Online. “None of this bodes well for inflation. It’s here to stay.” Producer prices are considered to be the forerunners for the development of general inflation.

This was 7.9% in August. In July, the inflation rate fell from 7.6 to 7.5%, but this was mainly due to the temporary reduction in VAT on fuel and the 9-euro ticket. However, both measures expired at the end of August, which is why the Bundesbank expects a further surge in inflation in September. The inflation rate is likely to “advance into the double-digit range in the next few months,” warned the bank.

The development of producer prices is still being driven by energy costs. In August, for example, the cost of natural gas rose by 209.4% within a year. Power plant operators even had to pay 269.1% more for the purchase of natural gas, industry 264.9%. A full 174.9% more was due for electricity than a year earlier, and petroleum products cost producers 37% more. Excluding energy, producer prices were 14 percent higher than in August 2021, barely increasing compared to the previous month.

The high energy prices are also having an impact on so-called intermediate goods such as metals or basic chemicals. In addition, durable and consumer goods are also affected by the enormous price increases.

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Source: RT

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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