Rising prices despite economic upturn
The economy is currently experiencing a major upswing – but wholesale prices are rising rapidly. Such a sharp increase was last recorded in July 2008. The Federal Statistical Office announced that already in May prices were about 9.7 percent higher than a year ago. In March, there was an increase of 4.4 percent and in April of 7.2 percent.
Corona pandemic as trigger
The impact of the Corona pandemic is responsible for this increase. At the beginning of the Corona crisis, various prices dropped sharply, hence the high increase. Likewise, increases in import and producer prices have a high impact. Especially petroleum products have a large share in the wholesale inflation rate. These rose by 47 percent. Scrap and residual materials also saw a huge increase of 64.6 percent. Ores, metals and semi-finished metal products recorded an increase in price of 41.2 percent. Prices of raw and sawn timber increased by around 37.7 percent year-on-year. An increase of 22.9 percent was seen for cereals, raw tobacco, seeds and animal feed, and 11.4 percent for chemical products. Supply shortages of steel, metal and wood continue to hamper construction work.
Prices are not only rising
There are also prices that have decreased compared to May 2020. These include data processing equipment and software, with a 4.7 percent decrease, and the price of alive animals, with a 2.5 percent decrease. To the extent that prices are increased, wholesalers pass them on to their customers. Therefore, wholesale prices are a kind of indicator for future developments in consumer prices. These have already risen sharply in the past. This development is putting great pressure on the central banks, which are working to stabilize prices. So far, the European Central Bank has kept interest rates the same.
Source: www.kloepfel-consulting.com