According to data released Destatis today, in Germany, the producer price index (PPI) increased by 3.8 percent in October compared to the previous month and was registered as 18.4 percent above market expectations of 16.2 YoY.




According to Destatis data, energy prices as a whole were up 48.2% compared to October 2020 and by 12.1% compared to September 2021. Mainly responsible for the high rise of energy prices was the strong price increase of natural gas (distribution) which was +81.4% on October 2020 and electricity (+49.6%).The overall index disregarding energy was 9.2% up on October 2020.

Prices of intermediategoods increased by 18.1% compared to October 2020. Compared to September 2021 these prices were up 0.9%. The highest impact on the price development of intermediate goods had the increase of metals’ prices which were 37.8% up on October 2020. Prices of metallic steel and ferro-alloys increased by 56.4%. Prices of non-ferrous metals were up 29.8%, aluminium prices 67.4% up. Compared to September 2021, prices of unwrought aluminium rose by 13.1%.

It is very clear from the data of Destatis that the record-breaking natural gas prices in the European markets have created cost pressures in Germany, which is the largest economy in the region. On the other hand, it is observed that the high levels of commodity prices, especially crude oil, and the supply bottlenecks caused by the pandemic have become efficient in the energy and intermediate goods group. In addition, the depreciation of euro in October also contributes to the prices of investment goods and durable goods.

So, it is likely that producer inflation, which has reached its highest level since 1951, will continue to transition to consumer prices, while cost pressures may become apparent in the financial statements of German companies. Following the data set, DAX40 index declined to 16 147.