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Producer prices in Germany rose by 25% in January

Prices for commercial products in Germany rose faster than ever in January 2022, according to new figures from the Federal Statistical Office (Destatis). The figures give an indication of how consumer prices could develop in the coming months.

German automakers are raising prices more than ever

Faced with ever-higher costs for energy such as natural gas, electricity and oil, German manufacturers raised prices more than ever in January. According to Destatis, producer prices for commercial products increased by an average of 25% in the first month of 2022, compared to January 2021.

“This is the largest year-over-year increase since records began in 1949,” Destatis wrote. “Compared to the previous month, commercial producer prices increased by 2.2%”. Statisticians said rising energy prices continue to be primarily responsible for the rise in commercial producer prices.

In January 2022, energy prices were on average 66.7% higher than in the same month in 2021. The price of natural gas particularly increased, at an annual rate of 119%. Excluding energy, producer prices were on average 12% higher than in 2021.

Price increases will likely be passed on to consumers

The trend hints at what may be in store for consumers in the coming months, with producer prices seen as an indicator of where inflation is headed. Producer prices are given for wholesale products and raw materials, before they are processed or sold, and can therefore give an early indication of future consumer price developments.

“It can be assumed that retailers will pass on at least some of this [price increase] end consumers,” Jens-Oliver Niklasch, an economist at LBBW, told Der Spiegel. “The question is how big will this part be.”

The Munich-based Ifo Institute announced earlier this year that it expects average inflation in Germany to reach 4% this year. If that happens, it will be the highest rate seen in the Federal Republic since 1993.

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