PPI in Europe Continues to Rise, Showing What’s Waiting Down the Road

The Producer Price Index (PPI) continues to rise in Europe. PPI figures for November showed an increase of 23.7% YoY. Thus, the PPI continues to rise, which in October showed an increase of 21.9%. MoM, the PPI rose by 1.8% against a forecast of just over 1%.

The PPI is seen by many as an indicator of future consumer price increases. When manufacturers’ costs rise in the long term, they have to pass these costs on to consumers. This could further increase consumer prices.

In addition, there were also CPI figures from the month of December from Germany.

The CPI continued to rise in Germany in December. Year on year, the CPI rose by 5.3%, compared with an increase of 5.2% in November. Month-on-month, this represents an increase of 0.5%. This means that consumer price increases in Germany remain at a historic level. The last time such price increases were seen was a good 30 years ago.

The food category, in particular, rose sharply by 6% in December. Energy increased by 18.3%. Services increased by 3.1%.

It is not surprising that Germans continue to back gold. The knowledge of the last hyperinflation from the Weimar Republic does not seem to have been forgotten and many now also see parallels to that time. Gold purchases in Germany have increased sharply in 2021. For example, 80% of the Krugerrand coins exported last year went to Germany. But we also hear from the general public that longer waiting times are to be expected for physical gold and silver purchases.

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