Germany’s finance ministry warned of a ‘noticeably gloomy’ economic outlook as a record surge in factory prices added to the country’s inflation headache.
The producer price index, which measures the change in the cost of raw materials and industrial products, rose 37.2 per cent in July compared with a year ago.
That was the biggest increase since records began in 1949 and was driven by energy, with prices up by 105 per cent on last year.
Under pressure: Europe’s biggest economy is facing surging costs and weakening growth as well as the spectre of energy rationing as Russia cuts its gas supplies
Europe’s biggest economy is facing surging costs and weakening growth as well as the spectre of energy rationing as Russia cuts its gas supplies.
GDP stagnated in the second quarter with zero growth, and its headline inflation rate for July, at 8.5 per cent, looks set to climb further.
Europe’s heatwave has piled on the pain with low water levels in the Rhine, an industrial artery, also taking its toll.
Germany’s finance ministry said: ‘The outlook for the further development (of the economy) is noticeably gloomy.’ It blamed Russian gas cuts and a rise in the cost of energy and other goods, as well as the lockdown policy in China, a big export destination.
Together these were ‘weighing heavily on the economy’s development’, the report said.
It came a day after Europe-wide figures showed inflation at 9.8 per cent. The euro fell as low as $1.0033 – again closing in on parity with the US dollar after briefly dipping below it last month. The pound slid by more than a cent to as low as $1.1793. Sterling also fell versus the euro, to as low as €1.1752.
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