Inflation and record prices – Top Channel

“This was the highest increase since the start of measurements in 1949The Federal Statistical Office announced on Monday.

Producer prices are seen as a precursor to the development of inflation. The statistics show the prices of the products from the factory gate – that is, even before the products are further processed or sold.

According to statisticians, the main reason for the large increase in producer prices is again energy. The price of energy rose in February by an average of 68 percent. Natural gas has cost 125.4 percent more than in February 2021. Electricity and heating oil have increased by 56.9 percent.

The war in Ukraine

If the increase in energy prices is not included in the percentage, then producer prices have increased by about 12.4 percent more than a year ago. Food prices rose 9.2 percent. Prices of vegetable oils increased by 50.1 percent, butter by 64.4 percent and coffee by 16.9 percent. There were also high increases for metals, fertilizers and wooden packaging.

“Current price developments have not included the consequences of Russia’s aggression against Ukraine,” said the statistical authorities. The calculations of these prices were made on February 15, ie before the start of the war.

Since the Russian invasion of Ukraine on February 24, 2022, the prices of energy, fertilizers and foods such as wheat and sunflower oil have continued to rise, with devastating consequences especially for developing countries.

Basic things are missing in construction

Given the war and war-related sanctions, the German construction industry even warned that construction could be halted in Germany. “We can not say for sure today whether there will be enough material for all construction sites in Germany,” Tim Oliver Müller, general manager of the German Association for the Main Construction Industry (HDB), said on Friday.

Meanwhile, deliveries of basic items such as nails or screws, which are missing due to sanctions, have been suspended. As a result of the war, in recent days there has been a sharp rise in prices for steel, aluminum and bitumen raw material, which is required for the production of asphalt.

Therefore, suppliers of materials no longer make any binding offers for these materials. “In some cases, prices are only guaranteed for a few hours. It is therefore impossible to calculate and submit bids as before, ”says Müller.

Affected almost everyone

Most German companies are now noticing the effects of the war in Ukraine, directly or indirectly. In a survey by the German Chamber of Industry and Commerce (DIHK), which polled 3,700 companies last week, 78 percent of them said they were affected by the war. Only 22 percent have so far felt no consequences of the war and the sanctions imposed on Russia.

The results for the industry are particularly alarming, said DIHK CEO Martin Wansleben. Two out of three German companies state that they are obliged to bill prices to customers. “There is additional inflation potential here.” Three-quarters of industrial companies have problems with logistics and supply chains, with almost 90 percent reporting shortages of raw materials and by-products. Important imports from Russia for German industry include aluminum, nickel and titanium.

According to a survey in the metal and electrical industry, 69 percent of all companies expect cost increases and almost half of them expect significant losses in sales and profits, reports the Gesamtmetall Employers Association.

Bigger drop than that from the pandemic?

The association’s chief executive, Oliver Zander, warned against banning Russian oil and gas in order to hurt Russia and show solidarity with Ukraine. “Stopping the purchase of Russian oil and gas would be accompanied by supply disruptions of the heavier type and would not be economically viable,” Zander said. Many jobs would be lost. “We can probably already assume that the current situation and the current sanctions will lead to an economic downturn that is approaching Corona, but it is also likely to overcome it.”

The Kiel Institute for World Economy (IfW) does not expect prices to normalize at this time. “The inflation rate this year, at around 5.8 percent, may be higher than ever in reunited Germany,” says the current forecast. If gas prices rise by 50 percent compared to a year ago, an inflation rate of more than six percent is possible./DW

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