At the moment, all reports about inflation are being followed closely.

On Tuesday, the European statistical office Eurostat reported a value that was unusually high.

The producer prices of industrial products in the euro zone rose at a record pace in June: they increased by 10.2 percent compared to the same month last year.

That was the highest value since the introduction of the euro as a book currency in 1999. In May there had been an increase of 9.6 percent, compared to the previous month the increase was now 1.4 percent.

Christian Siedenbiedel

Editor in business.

  • Follow I follow

Energy prices rose by 25.4 percent compared to the same month last year, i.e. by more than a quarter.

Pre-products cost 10.6 percent more than a year ago because there are bottlenecks here all over the world - for wood and steel, for example.

Part of the price increase over the year is related to the unusually low prices in the corona crisis year 2020. 

The producer prices are considered to be a possible leading indicator for the development of inflation.

In the statistics, the prices are kept ex-factory - i.e. before the products are further processed or go on sale.

You can use it to give an early indication of the development of consumer prices.

It is unclear how much the higher prices will be passed on to consumers.

Raw materials are already driving consumer prices

Inflation in the euro area is currently picking up speed and is exceeding the target set by the European Central Bank (ECB).

Consumer prices rose by 2.2 percent within a year in July.

This is the highest rate since autumn 2018. In Germany, consumer prices rose by as much as 3.8 percent in July according to national calculations.

Jörg Krämer, Commerzbank's chief economist, said that the higher raw material prices are slowly starting to affect consumer prices as well. "The HWWI raw material price index excluding energy rose by 71 percent in June compared to the previous year," says Krämer. “This strong increase has started to affect the prices of consumer goods.” For example, producer prices for consumer goods without energy rose by 1.2 percent in June, after having fallen in March.

In addition, the price of goods excluding energy in the consumer price index rose by 3.6 percent in July - after a rate of 1.6 percent in June. "The increase was stronger than the base effect of the VAT cut suggests," said Krämer. All in all, the rise in the price of raw materials, even beyond the more expensive energy, is currently driving consumer prices, said Krämer: "This should continue for a few more months and is an argument why inflation should be well above 4 percent in the coming months."