Record rise in German producer prices adds to gloomy outlook

The German economy, Europe’s largest, stagnated in the second quarter.

Andreas Rentz / Staff / Getty Images

Germany’s economic outlook is bleak due to rising energy prices and supply chain disruptions, the finance ministry said on Friday, a message underscored by record producer prices.

Germany’s economy, Europe’s largest, stagnated in the second quarter, with the war in Ukraine, soaring energy prices, the pandemic and supply disruptions bringing the country to the brink of recession.

“The outlook for further development (of the economy) is currently significantly bleak,” the ministry said in its monthly report in August, adding that it was marked by “a high degree of uncertainty”. “.

“Significantly lower gas supplies from Russia, persistently high energy prices and an increasing number of other commodities, as well as longer-than-expected supply chain disruptions, are also related to the no-no policy.” China’s COVID, is weighing heavily on the development of the economy,” it said.

Producer prices, widely seen as a leading indicator of inflation, rose to record highs both for the month and for the year in July, mainly due to high energy prices, the federal statistics office said on Friday. , the federal statistics office said.

The office said overall energy prices were up 105% from July 2021, mainly due to higher prices for natural gas and electricity.

Tapping into already high energy costs, the German government will impose a tax on gas consumers from October 1, which will add several hundred euros to the annual energy bill of middle-class households. jar. To cushion the blow, sales tax on gas will be reduced to 7% from 19% while taxes apply.

Higher energy prices mean inflation is unlikely to cool down anytime soon: Germany’s annual inflation rate for July was 8.5%, matching the euro zone’s record 8.9% rate .

The German government in April forecast 2022 inflation at 6.1%. The finance ministry said it will issue updated economic forecasts on October 12.

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