German PPI hits record high: 45.8% annual rate

© Reuters German PPI hits record high: 45.8% annualized rate.

Investing.com – On Tuesday (September 20), data showed that the producer price index in Germany, the euro zone’s largest economy, reached a record high, adding to pressure on the European Central Bank to raise interest rates aggressively.

PPIAgaina recordever 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 well above analysts’ expectations. Economists had expected the PPI rate to slow to 1.6% monthly and an annual rate of 37.1%.

The German statistics office said the record PPI was mainly due to increasing technical problems at French nuclear power plants and a subsequent surge in electricity prices.

Electricitypricetake offLi is the criminaldisasterhead

Historically France’s nuclear power has been a major exporter of electricity, but it has been plagued by technical problems, and due to drought, France’s 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 about a shortage of coal power.

Affected by the various aspects above, German energy prices overall increased by 139% compared to the same period last year, and increased by 20.4% compared to July. In particular, electricity prices rose by 175%. However, the increase was not limited to energy: intermediate goods prices rose 17.5%, capital goods prices rose 7.8%, and consumer durables and consumer non-durables rose 10.9% and 16.9%, respectively.

the situation has eased

However, the power shortage has recently eased. Water levels on the Rhine have risen and navigation has resumed, and Germany has begun a policy change to allow three nuclear power stations to continue operating instead of shutting down 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 normal price, and it is still a heavy burden for many German manufacturing companies.

Germany opens a new source of natural gas

On the other hand, the German government is also increasing its efforts to look for sources of natural gas outside of Russia. Prime Minister Olaf Scholz is said to have visited the United Arab Emirates on Sunday to try to sign LNG supply contracts.

Currently, the German government has leased two floating terminals, which will start to regasify liquefied natural gas from the beginning of this year and supply the gas origin station, which can replace a quarter of Russian natural gas.

Two more floating storage and regasification units (FSRUs) are expected to start operating later in 2023, meaning that half of Russia’s gas supply will find alternative sources.

[Daw’r erthygl hon gan Yingwei Caiqing Investing.com, i ddarllen mwy, mewngofnodwch i cn.investing.com neu lawrlwythwch Ap Yingwei Caiqing]

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Collection: Liu Chuan

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