OPINION
Market Rating Before FOMC MeetingJan 31
Producer Inflation Breaks Record in Germany
According to the data reported today by the Federal Statistical Office (Destatis), while the producer price index (PPI) in Germany increased by %7.9 in August compared to the previous month, it was announced at its highest level since its establishment in 1948, with a level of %45.8, well above the market expectations of %37.1 on an annual basis.
When the details of the report announced by Destatis are analyzed, energy products increased by %20.4 monthly, followed by non-durable goods at %0.8, durable goods at %0.6, investment products at %0.4, and intermediate goods at %0.1.
On an annual basis, it was reflected that the biggest factor in the rise of producer inflation came from energy prices at %139.0, while it was recorded that it was caused by intermediate goods at %17.5, non-durable consumer goods at %16.9, durable consumption goods at %10.9 and investment goods at %7.8.
In the report, it was noteworthy that electricity prices increased by %174.9, and natural gas distribution prices for the industry increased by %209.4 on an annual basis. In addition, it was underlined that oil prices have been %37.0 more expensive since August 2021, while it was noted that fuel prices increased by %104.0.
The data set disclosed shows that the energy crisis caused by the Russia-Ukraine war has a very high impact on the record level of producer inflation in Germany, Europe's leading economy.
Natural gas contracts on the Dutch stock market are currently below 200 euros. However, prices broke a record at 345 euros on August 26, when the Russian energy company Gazprom cut off gas flow from the Nord Stream 1 pipeline to Germany due to turbine failure. This shows that another cost wave towards German companies is at the door and the pass-through to consumer inflation may continue. In addition, it is observed that the weakening euro in the recent period put relative pressure on price increases through imports of intermediate goods, investment goods, and capital goods.
On an annual basis, it was reflected that the biggest factor in the rise of producer inflation came from energy prices at %139.0, while it was recorded that it was caused by intermediate goods at %17.5, non-durable consumer goods at %16.9, durable consumption goods at %10.9 and investment goods at %7.8.
In the report, it was noteworthy that electricity prices increased by %174.9, and natural gas distribution prices for the industry increased by %209.4 on an annual basis. In addition, it was underlined that oil prices have been %37.0 more expensive since August 2021, while it was noted that fuel prices increased by %104.0.
The data set disclosed shows that the energy crisis caused by the Russia-Ukraine war has a very high impact on the record level of producer inflation in Germany, Europe's leading economy.
Natural gas contracts on the Dutch stock market are currently below 200 euros. However, prices broke a record at 345 euros on August 26, when the Russian energy company Gazprom cut off gas flow from the Nord Stream 1 pipeline to Germany due to turbine failure. This shows that another cost wave towards German companies is at the door and the pass-through to consumer inflation may continue. In addition, it is observed that the weakening euro in the recent period put relative pressure on price increases through imports of intermediate goods, investment goods, and capital goods.
