OPINION
Market Rating Before FOMC MeetingJan 31
Producer Prices in Germany Show the Highest Increase in 73 Years
As Destatis reported; Energy prices, which increased by 87.1 percent, were the determining factors in producer inflation, and saw the highest increase since 1949. The monthly net contribution of energy was 2.5%.
It was emphasized that the biggest factor in the increase in producer inflation on an annual basis was the trend in energy prices. It was noted that electricity prices increased by 90.4 percent and natural gas distribution prices for the industry increased by 210.7 percent.
On the other hand, it was stated that the prices of intermediate goods increased by 25.1 percent, durable goods by 9.4 percent, and capital goods prices by 7.1 percent on an annual basis in May. In the report, petroleum products increased by 55.8% compared to the previous year, it was also reported that the annual change in PPI was 16.5%, excluding energy prices.
The disclosed data shows that; Fluctuations in commodity prices with the reflections of the Russia-Ukraine war play a major role in the cost pressures faced by German companies. In addition, it is very clear that the weakening euro recently put pressure on price increases through intermediate goods, investment goods, and capital goods.
At this point, according to Destatis, we see that with the announcement of the consumer price index (CPI) in Germany, 7.9 percent annualized in May; German companies are struggling to reflect in prices the cost increases they have experienced. This situation may pose a downside risk to the financials of German companies and further weigh on the DAX40 index, the region's indicator.
