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Manuel Fritsch / Christoph Schröder IW-Trends No. 2 4. July 2022 The impact of disrupted production on producer prices in Germany

From 2020 to 2021 the producer prices of manufactured goods in Germany increased by 6 per cent. However, price hikes accelerated during 2021, a development which has continued into 2022.

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The impact of disrupted production on producer prices in Germany
Manuel Fritsch / Christoph Schröder IW-Trends No. 2 4. July 2022

The impact of disrupted production on producer prices in Germany

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German Economic Institute (IW) German Economic Institute (IW)

From 2020 to 2021 the producer prices of manufactured goods in Germany increased by 6 per cent. However, price hikes accelerated during 2021, a development which has continued into 2022.

In this year’s first quarter, producer prices rose by 27.3 per cent year-on-year. This increase was driven by intermediate inputs, with prices for energy-intensive goods rising particularly steeply, but wood, iron and steel also becoming considerably more expensive. In the services sector, the price of water trans port services rose by a factor of two and a half, while other logistics services also became significantly dearer. Overall, intermediate input prices for the manufacturing sector went up by 10.4 per cent in 2021, driven especially by the price increase for imported goods (18.5 per cent). Prices for domestic supplies of intermediate goods rose by 7.0 per cent. In the first quarter of 2022, manufacturing firms had to spend 19.1 per cent more on intermediate inputs than in the first quarter of 2021, with the price of imports soaring by more than 32 per cent. Due to the high proportion of intermediate inputs in total output, the increase in costs for intermediate goods has been higher than the actual increase in producer prices, both for manufacturing as a whole and specifically for the metalworking and electrical engineering industry. This suggests that manufacturers have not passed on the full increase in input prices or have been able to slow down the increase as a result of long-term supply contracts

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The impact of disrupted production on producer prices in Germany
Manuel Fritsch / Christoph Schröder IW-Trends No. 2 4. July 2022

The impact of disrupted production on producer prices in Germany

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German Economic Institute (IW) German Economic Institute (IW)

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