German wholesalers: price increase as in the oil crisis

As of: 13.09.2021 11:24 a.m.

Another harbinger of even higher inflation: In wholesale, prices have risen as sharply as they were last in autumn 1974. Some raw materials have risen by two thirds within a year.

Wholesale prices in Germany rose more sharply in August than they have been for almost 47 years. In August they rose by 12.3 percent compared to the corresponding month of the previous year, as reported by the Federal Statistical Office. The upward trend in prices accelerated again significantly: in July the rate of inflation was 11.3 percent and in June 10.7 percent. The last time there was a stronger increase was in October 1974 with 13.2 percent during the first oil crisis.

“The high rise in wholesale prices compared to the previous year is due, on the one hand, to the current sharp rise in prices for many raw materials and intermediate products,” explained the statisticians. “On the other hand, there is a base effect due to the very low price level in the previous months in connection with the Corona crisis.”

Prices doubled in some cases

The main price drivers were ores, metals and metal intermediate products, which rose by almost two thirds. The prices of old and residual materials were more than twice as high. Raw and sawn timber cost almost 60 percent more. The prices for solid fuels and petroleum products were more than a third above the previous year’s level.

In the past few months there had been an increasing number of reports of delivery problems with numerous products. Due to the significant recovery of the world economy from the Corona slump, prices for many products are currently rising rapidly. The world’s largest economies, the USA and China, are particularly expecting strong growth this year, especially since major economic stimulus programs have been launched there.

Pressure on consumer prices

The development of wholesale prices is an indicator of the future development of general consumer prices, since wholesale is the intermediate station between manufacturers and end customers. Added to this are the prices for goods imported into Germany and the prices that manufacturers receive for their products. Monthly statistics are also published for these so-called import and producer prices. They all have an impact on consumer prices, on which the European Central Bank (ECB) bases its monetary policy.

In August, the inflation rate in Germany was 3.9 percent. It was as high as it was last in 1993.

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