High energy costs continue to drive up German producer prices - but not at record speed. Contrary to economists' expectations, prices rose more slowly in June than in May. This can also affect consumer prices.
German producer prices rose less sharply in June than in the previous months. As reported by the Federal Statistical Office (Destatis), producer prices increased by 0.6 percent compared to the previous month and were 32.7 percent higher than in the same month last year. That's slightly less than the previous month's record gain of 33.6 percent, which was the sharpest rise since the surveys began in 1949. Economists polled by Dow Jones Newswires had expected June rates of 1.0 and 33.9 percent.
The price trend for energy continued to make the largest contribution to the increase in producer prices compared to the previous year. Energy prices were 86.1 percent higher on average in June. The largest contributors to the year-over-year rate of change for energy were natural gas in distribution, up 141.1 percent year-on-year, and electric power, up 93.3 percent. Power plants paid 227.0 percent more for natural gas than a year earlier. Natural gas was 182.6 percent more expensive for industrial customers and 159.5 percent more expensive for resellers. Mineral oil products were 52.9 percent more expensive than in the same month last year.
Producer prices affect consumer prices, on which the European Central Bank (ECB) bases its monetary policy. In both Germany and the eurozone, inflation is well above the ECB's medium-term target of 2 percent. After a long period of hesitation, the ECB wants to fight inflation and on Thursday it will raise its key interest rates for the first time in eleven years.