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Global Economy

"Price shock" feared for food

The experts at the Munich economic research institute ifo expect food prices to rise sharply this year. "According to our surveys, more than two-thirds of food manufacturers are planning further price increases in the coming months," said Ifo economics chief Timo Wollmershäuser in the "Welt am Sonntag". That's more than ever before in reunified Germany. "Thus, food prices are likely to be a key inflation driver this year."

The ifo Institute expects food prices to rise by seven percent in 2022 compared to the previous year. For this reason, the economic researchers have raised their forecast for the inflation rate in Germany to four percent.

Producer prices shot up 22 percent

"The price increases in the supermarkets are only just beginning," said Christian Janze from the consulting firm EY of the newspaper. "Producer prices are rising sharply, which ultimately has an impact on consumer prices, especially after the next harvest." A "price shock" is imminent.

The latest calculations by the Federal Statistical Office show how much producers have recently raised the prices of agricultural products. Prices climbed an average of 22 percent in December. "This is the highest year-on-year price increase since July 2011," the statisticians said. Vegetable products rose in price by 29 percent and thus particularly sharply, animal products by 17 percent.

Bad harvests

"The increase in the price of plant products is partly due to the increase in grain prices since July 2020," said the statistics office. The high demand from Germany and abroad with the simultaneous low harvest quantities remains decisive for this.

The statisticians explain the enormous increase in the price of rapeseed by 68 percent with the fact that this is also used for energy production. A worldwide falling supply meets high demand.

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