In August, German producer prices surged at their strongest rate since the same month last year. This was primarily driven by surging energy prices, raising the chances that headline inflation would go even higher.

On Tuesday, the Federal Statistical Office reported that producer prices of industrial products rose by 45.8 per cent in the same month last year. Also, compared to July 2022, prices increased by 7.9 per cent. The rise was considerably stronger than expected, with analysts forecasting a 37.1 per cent year-on-year increase and a 1.6 per cent monthly rise. In July, the year-on-year (Y-o-Y) rise had been 37.2 per cent, and in June, 32.7 per cent. In August, energy prices on average were over double the same period last year, up 139 per cent and 20.4 per cent higher than the previous month.

Inflation in Europe’s largest economy is running at 8.8 per cent. Producer prices for electricity increased 174.9 per cent compared with August 2021 and 26.4 per cent compared with the previous month. Excluding energy, the year-on-year increase in producer prices came in at 14 per cent in August.