© Archyde.com. German PPI hits record high: 45.8% annual rate
Investing.com – On Tuesday (September 20), data showed that the producer price index in Germany, the euro zone’s largest economy, hit a record high, adding to pressure on the European Central Bank to aggressively raise interest rates.
PPIAgainrecordall-time high high annual rateup to45.8%
According to the German Statistics Office, it was up 7.9% and up 45.8%, both recording the highest record in the 83-year history of the Federal Republic of Germany, and far higher than analysts’ expectations. Economists had expected the PPI rate to slow to 1.6% on a monthly basis and a 37.1% annual rate.
Germany’s statistics office said the record PPI was mainly due to growing technical problems at France’s nuclear power plants and a consequent surge in electricity prices.
ElectricitypricesoarLi is the culpritdisasterhead
French nuclear power has historically been a major exporter of electricity, but it has been plagued by technical problems, and because of drought, French rivers are short of water, and nuclear power also needs a lot of water.
At the same time, lower water levels in German rivers, especially the Rhine, prevented coal from being transported to power plants in southern Germany. In particular, Russia almost stopped supplying natural gas to Germany at the end of August, fueling concerns regarding a shortage of coal-fired power.
Affected by the above-mentioned various aspects, German energy prices as a whole increased by 139% compared with the same period last year, and increased by 20.4% compared with July. In particular, electricity prices rose by 175%. However, the rise was not limited to energy: prices of intermediate goods rose by 17.5%, capital goods prices rose by 7.8%, and consumer durables and non-durable consumer goods rose by 10.9% and 16.9%, respectively.
the situation has eased
However, the power shortage has eased recently. Water levels on the Rhine have risen and navigation has resumed, and Germany has begun to change policy to allow three nuclear power plants to continue operating instead of closing at the end of the year.
Affected by this, wholesale electricity prices in Germany also began to ease. At the same time, the European Union has also begun to intensify efforts to curb electricity demand and change the pricing mechanism, effectively allowing natural gas power plants to be priced according to market conditions.
As of Monday, electricity contract prices in Germany for 2023 had fallen to 530 euros per megawatt-hour from a peak of more than 1,015 euros per megawatt-hour in August.
However, this price is still several times the usual price, and it is still a heavy burden for many German manufacturing companies.
Germany opens up new source of natural gas
On the other hand, the German government is also increasing its efforts to seek natural gas sources outside Russia. Prime Minister Olaf Scholz reportedly visited the United Arab Emirates on Sunday to seek to sign LNG supply contracts.
At present, the German government has leased two floating terminals, which will start regasification of liquefied natural gas from the beginning of this year and supply the gas origination station, which can replace a quarter of Russia’s natural gas.
Two other similar floating storage and regasification units (FSRUs) are due to start operating later in 2023, meaning that half of Russia’s gas supply will find alternative sources.
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Compilation: Liu Chuan
