German Import Price Inflation Highest Since 1974

Germany’s import price inflation accelerated sharply in March to its highest level in nearly five decades with the data starting to reflect the impact of the war in Ukraine.

Import prices rose 31.2 percent year-on-year following a 26.3 percent increase in February, preliminary data from Destatis showed Friday. Economists had forecast 28.6 percent inflation. In January, import prices rose 26.9 percent.

The latest inflation rate was the highest since September 1974 during the first oil crisis, when import prices surged 32.6 percent annually, Destatis said.

On a month-on-month basis, import prices rose 5.7 percent in March 2022, faster than economists’ forecast of 3.4 percent.

Energy import prices soared 160.5 percent annually in March, driven by a 304.3 percent jump in natural gas prices and an 81.3 percent increase in crude oil prices.

The index of import prices, excluding crude oil and mineral oil products, increased 26.6 percent annually in March and rose 4.1 percent from the previous month.

Export prices climbed 15.9 year-on-year in March after a 12.4 percent increase in the previous month. The rate was the highest since November 1973 during the first oil crisis, when it was 16.8 percent.

Energy prices have risen sharply since the war in Ukraine and that is strongly influencing inflation across the region as many European countries are dependent on gas and oil supplies from Russia. The rising trend in energy prices is expected to continue for sometime.

Several European countries including Germany are trying to reduce their dependence on Russian gas.

This week, the state-owned Gazprom shut gas supplies to Poland and Bulgaria, and Moscow demanded that European customers of its energy should pay in rubles, causing an uproar.

Most inflation indicators of Germany are setting new highs in recent months amid runaway energy prices and supply bottlenecks due to the war and a resurgence of coronavirus in some parts of the world.

Official data showed on Thursday that German consumer price inflation unexpectedly accelerated further in April to 7.4 percent, a new high in over four decades. Producer price inflation hit a record 30.9 percent in March.

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