They increased by an average of 33.6 percent. “This was the highest increase compared to the same month last year since the survey began in 1949,” said the Federal Statistical Office on Monday. “As a result, commercial producer prices have recorded new record increases every month since December 2021.”
Interviewed economists had assumed an unchanged value of 33.5 percent. From April to May alone, producer prices rose by 1.6 percent.
“No trend reversal in sight”
The development does not bode well for consumers, as it is regarded as a precursor to general inflation. In the statistics, the prices are listed from the factory gate – even before the products are further processed or sold. At 7.9 percent, the inflation rate is currently higher than it has been since the winter of 1973/74. “So far, companies have probably only partially passed on the massive increase in producer prices to end consumers,” said Commerzbank economist Ralph Solveen. “Therefore, the underlying dynamics of consumer prices should at least remain very high, and possibly even increase a little.” Economist Jens-Oliver Niklasch from LBBW sees it this way: “There doesn’t seem to be a trend reversal in sight for energy prices in particular, especially in view of the news about the throttling of Russian natural gas supplies.”
The main reason for the sharp rise in prices is again energy, which has cost significantly more since the start of the Russian invasion of Ukraine on February 24th. Producer prices here were 87.1 percent higher than in May 2021. Natural gas rose by 148.1 percent. Petroleum products cost 55.8 percent more than a year earlier. Light heating oil was almost twice as expensive, while motor fuels were 49.4 percent more expensive.
Prices make things difficult for companies
There were also high price increases for intermediate goods, especially metals, fertilizers and animal feed, as well as industrial gases and packaging materials made of wood. Food prices increased by 19.2 percent. The prices for butter (+80.2 percent), untreated vegetable oils (+68.4 percent), beef (+42.9 percent), coffee (+33.6 percent) and milk and milk products ( +24.1 percent). “The high inflation rates for consumer goods that have now been achieved are worrying for consumers,” said LBBW economist Niklasch.
But the construction industry is also sounding the alarm. Their companies have to pay 26.7 percent more for asphalt, for example. The strong increase in material prices and thus construction costs make it difficult for the companies to create, said the general manager of the main association of the German construction industry, Tim-Oliver Müller. “In the case of projects that were started several months or even years ago, this development could by no means be foreseen when the contract was signed.” If fixed prices were agreed, companies would now have to shoulder the increased costs themselves. Almost every fourth civil engineering company is affected by this.
Source: Nachrichten
