The already high inflation in Germany increased further in February, even before the outbreak of the Ukraine war.

Producer prices rose by 25.9 percent compared to the same month last year, as the Federal Statistical Office announced on Monday in Wiesbaden.

That's a record increase.

Month-on-month, the prices manufacturers receive for their goods rose 1.4 percent.

However, the current price developments in connection with Russia's attack on Ukraine are not yet included in the results, the Federal Office said.

The survey was carried out on February 15, i.e. before the start of the war.

According to the statisticians, the main reason for the price increase is the price development of energy.

Energy was therefore 68 percent more expensive in February than in the same month last year.

Natural gas was even a good 125 percent more expensive.

There were also high price increases for intermediate goods such as metals, fertilizers and packaging materials made of wood.

ECB under pressure

The producer prices are included in the consumer prices, on which the European Central Bank (ECB) bases its monetary policy.

While the ECB still expected an inflation rate of 3.2 percent in the EU for 2022 in December, the current forecast is 5.1 percent.

According to the Federal Statistical Office, the inflation rate in Germany was 5.1 percent in February.

This makes one thing clear: both in Germany and in the eurozone, inflation is currently well above the ECB's medium-term target of two percent.

According to ECB Vice President Luis de Guindos, the euro area economy is not at risk of slipping into stagflation – i.e. weak growth coupled with high inflation.

"In our latest forecasts, even in our worst scenario for the current year in the euro area, we still expect growth of over two percent, so no stagflation," de Guindos told the "Handelsblatt" on Monday.

"But there is likely to be higher inflation for a longer period than expected before the war."

The war in Ukraine is weighing on the euro area economy and fueling energy prices, which were previously the main driver of inflation.

The ECB is not only assuming significantly higher inflation, but also weaker economic growth in the current year.

request for an interest rate hike

“What matters to us now is how strongly wages respond.

Because if the increases are too high, it can push prices up even further and contribute to permanently higher inflation," de Guindos said in the interview.

"So far we haven't seen any signs of this, but we have to monitor developments closely."

Politicians must also do their part to prevent a dangerous wage-price spiral, demanded the ECB Vice President: “The price shock for energy and raw materials that we are currently experiencing is making many companies and employees poorer.

Fiscal policy should help reduce the burden by providing temporary, targeted aid.

This would also reduce the risk of a wage-price spiral.”

Robert Holzmann, governor of Austria's central bank, told the Kronenzeitung that raising interest rates before the end of the bond-buying stimulus program could send a clear message to fight inflation.

Earlier the ECB had decided to leave interest rates unchanged this month.

According to the newspaper, Holzmann supports the majority decision of the ECB, but at the same time emphasizes: "The system of bond purchases is difficult for the population to understand.

A rate hike would have been a signal that everyone would have understood."

ECB President Christine Lagarde points to climate change as another key driver of inflation.

In their view, Europe's efforts to combat climate change will boost inflation in the short to medium term.

In the long term, however, this will lead to a reduction in prices, Lagarde said on Monday.

European leaders are working on plans to accelerate the shift towards a 'green' economy.

The fact that the European Union wants to reduce its dependence on Russian oil and gas after Russia's invasion of Ukraine also plays a role here.