New record in producer inflation in Germany

Germany's Producer Price Index (PPI) rose 33.6 percent last month compared to the same period in 2021, driven by the post-war rising energy prices in the region.

Germany's Federal Statistical Office (Destatis) has announced the PPI data for May.

Accordingly, the PPI in Germany increased by 1.6 percent in May compared to April and by 33.6 percent compared to May 2021. The expectation in the markets was that the PPI would increase by 1.6 percent monthly in May.

The increase in May was recorded as the highest annual increase since 1949, when PPI statistics began to be recorded. Thus, the record series in producer inflation since December 2021 continued in May as well.

Industry PPI had increased by 33.5 percent, 30.9 percent and 25.9 percent annually in April, March and February, respectively.

In the statement of Destatis, “The main reason for the increase in producer prices compared to the previous year continues to be the price trend in energy products.” it was said.

Natural gas distribution prices increased by 210.7 percent

According to the data, energy prices rose 87.1 percent in May compared to the same period of the previous year.

Electricity prices increased by 90.4 percent and natural gas distribution prices for industry increased by 210.7 percent.

In May, an annual increase of 25.1 percent in intermediate goods prices, 9.4 percent in durable consumer goods and 7.1 percent in capital goods prices was observed.

It is noteworthy that oil prices increased by 80.2 percent compared to the previous year, while meat prices increased by 42.9 percent and coffee prices by 33.6 percent.

Fertilizer prices were 110.9 percent more expensive compared to May of last year, while wooden packaging prices increased by 67.4 percent and feed prices by 48.7 percent in May.

Excluding energy prices, PPI rose 16.5 percent year-on-year in May. Producer prices are seen as a leading indicator for the development of inflation.

Meanwhile, annual inflation in Germany, which was 7.4 percent in April, rose to 7.9 percent in May due to rising fuel and food prices, reaching the highest rate since the first oil crisis in the winter of 1973-1974.