German producer prices are rising at the fastest rate in more than 45 years

By Maria Martinez

The producer price index for industrial products in Germany rose 12.0% in August compared to the previous year, German statistical office Destatis announced on Monday.

This is the biggest year-over-year increase since December 1974, when prices rose sharply during the first oil crisis, Destatis said.

“Monday’s figures suggest that the German industrial sector continues to feel the ripple effects of the global supply chain crisis,” said Thomas Rinn, global industrial manager at Accenture.

Compared to the previous month, the index rose 1.5% in August.

The main drivers of the increase were the prices of energy and intermediate products, said the statistics office.

Energy prices increased 24.0% year on year, due to the sharp increase in natural gas prices. The overall index after energy cuts rose 8.3% year-on-year in August, Destatis said.

Prices of intermediate goods rose 17.1% from August 2020, Destatis said. Prices for intermediate goods increased, especially for secondary metal raw materials and sawn timber, as well as wood packaging material and reinforcing steel bars.

Prices for durable consumer goods rose 2.8% year on year, while capital goods, such as machinery and vehicles, rose 2.4%, Destatis said. Rising prices for oils and fats also pushed up prices for non-durable consumer goods, which rose 2.1% from August 2020.

“The significant increases in the prices of intermediate goods reflect the impact of shortages of essential components in key sectors of German industry and the significant increases in transport costs,” Mr. Rinn said.

While supply bottlenecks are expected to continue over the next few months, the time has come for German industrial companies to reassess their logistics strategy, he said.

Write to Maria Martinez at [email protected]

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