Inflation is there, also in the minds of consumers.

But the price increases that consumers are currently seeing in supermarkets are probably just a bitter foretaste, according to procurement expert Wolfgang Schnellbächer from the Boston Consulting Group (BCG).

"The explosion in procurement prices caused by the Ukraine war has not yet reached consumers - with the exception of fuel prices," says Schnellbächer.

Mark Fehr

Editor in Business.

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His assessment is now also confirmed by a monthly Ifo survey, according to which more companies than ever before are planning to raise their prices.

In the survey, the companies indicate whether they intend to raise their prices in the next three months.

According to the economic research institute, price pressure has increased, especially among food retailers.

The Munich economic experts are therefore expecting an inflation rate of more than 5 percent for this year - that would be the highest value since the oil crisis 40 years ago.

In the afternoon, the Federal Statistical Office will publish a first estimate for inflation in March.

Farewell to the stable price world

Immediately after the outbreak of war in February, sharply rising prices for petrol and heating oil were observed, but for food and other everyday goods, the majority of the war-related price increases are still in the supply chain, according to the analysis by BCG partner Schnellbächer.

"Therefore, another wave of price increases is rolling towards consumers," the consultant fears.

Most of the price increases currently observed are still related to the scarce capacities after the corona pandemic.

The price wave caused by the war, on the other hand, is still on its way to shops and supermarkets.

According to a BCG analysis, the pandemic and the war have caused purchasing prices to rise at different rates depending on the industry: food manufacturers have to spend 11 percent more on procurement and have so far increased prices for their customers by 5 percent.

Mechanical engineering pays 10 percent more for procurement, but has so far only been able to increase sales prices by 3 percent.

Things are looking somewhat more favorable for the building materials industry.

Here, companies were able to convert the 19 percent increase in procurement costs into price increases of 14 percent.

The BCG figures are based on 250 European companies with sales of more than one billion euros each.

Why is it that companies pass on rising raw material and procurement prices to customers with a time lag?

"Most companies lack the tools to examine their supply chain," says BCG consultant Schnellbächer.

The rethinking in the companies takes a long time because the economy has been used to stable prices for decades.

Various shocks are now intensifying: the pandemic was followed by war and, above all, the aging society with a shrinking proportion of the workforce.

It can also be observed in the important plastics industry that manufacturers have not yet passed on their increased costs to end customers.

So much of the inflation is still in the supply chain.

For manufacturers of plastic products, the procurement prices for raw materials, basic materials and plastics had already risen to record levels before the Ukraine war, in some cases by 50 to 100 percent, reports procurement specialist Dimitrios Koranis from Nuremberg.

So far, however, manufacturers have only passed on a fraction of the price increases to end consumers.

Complex added value, raw material costs exploded

Roughly speaking, the path from the raw material to the end product in the plastics industry consists of three stages: crude oil and natural gas are converted into basic materials such as ethylene or benzene.

These raw materials are refined into plastics such as polyethylene, polypropylene or polyamide, which are used to manufacture a wide variety of plastic products.

50 million tons of plastic products are manufactured in Europe every year, 95 percent of which are mass products such as packaging films, PET bottles, beverage crates, pipes, window frames, car bumpers, insulation material or synthetic fibers for clothing.

The rest goes into particularly stable or heat-resistant technical plastics such as connectors, bicycle helmets, nylon, dowels, cable ties, engine parts or DVDs.

The unimaginably wide range of these applications shows that Russia and Ukraine play a key role in the Western economy, although the volume of imports and exports looks manageable at first glance.

"The lack of oil and raw materials and the associated price explosions will hit the entire economy," expects procurement expert Koranis.

The war has now further aggravated the situation, because both Russia and the Ukraine supply a large part of the raw materials and raw materials for plastics manufacturers.