German wholesale prices soar amid euro crisis

Germany has logged a considerable hike in wholesale prices in September. Fresh statistical data reveal the jump has been mainly due to fuel and mineral oil products becoming more expensive, adding to inflation fears. Price pressures in the German wholesale trade increased markedly in September, the National Statistics Office (Destatis) reported on Wednesday. All in all, wholesale goods and commodities were 4.2 percent more expensive than in the same month last year, the Destatis survey showed. It thus marked the biggest jump since November 2011, after prices rose by only 3.1 percent in August of this year. The report indicated that the surge was first and foremost a result of increasing prices fur fuel and mineral oil products, which soared by 11.3 percent year-on-year. The increase in prices for crops, seeds, raw tobacco and fodder was even more pronounced at 15.4 percent, with meat product prices also adding to inflation pressures. Growth incentives versus reduced inflation Declining prices for some metals, ores as well as for coffee, tea and spices were not able to offset the price hikes in other areas. Wholesale prices are widely seen as an early indicator for developments in the retail sector and hence for inflation. According to preliminary data, Germany posted 2.0-percent inflation in September while the crisis-stricken euro area as a whole logged a 2.7-percent price hike. The European Central Bank (ECB) last week decided to hold its historically low refinancing interest rate steady at 0.75 percent in a bid to encourage lending to private households and companies. Raising the benchmark rate would have had the opposite effect, but would have lowered inflation pressures in the 17-member single currency bloc.