2023-09-05 17:30:43
Ironically, the oil price could now pose a problem for the central banks. At least that’s what Carsten Mumm, the chief economist at private bank Donner & Reuschel, thinks. For months, inflation rates all over the world had been depressed by the fact that energy was no longer as expensive as it was last year, when the war in Ukraine followed the energy price rally at the end of the pandemic.
“In the past few weeks, however, crude oil prices have risen again – despite the increasingly clear economic slowdown and the associated fall in demand,” says Mumm. Brent crude oil from the North Sea now costs a good 90 dollars per barrel (159 liter barrel) again – a consequence in particular of the production cuts by the oil states. And a significant increase in the price of diesel in particular could be observed at the petrol stations.
What does that mean for inflation? Nothing good probably. At least from this side there is not much relief right now. In August, the inflation rate in Germany was 6.1 percent, which was only a relatively small drop from July’s 6.2 percent. Food in particular has become more expensive over the year, with a plus of 9 percent.
However, if you look at the dynamics of price development, i.e. at the change from month to month, energy has become more expensive again since July, while the rise in food prices has slowed somewhat. In services there was a drop in inflation from a high level – from 5.2 to 5.1 percent. How is this going to continue?
Auto industry wants to raise prices
The regular survey by the Ifo Institute in Munich on so-called price expectations provides an insight into how at least companies are thinking about further price increases. This value is calculated by subtracting the percentage of companies in an industry that are surveyed planning to lower prices from the percentage of companies that plan to raise prices. The figures for August were released on Tuesday.
Ifo economist Timo Wollmershäuser summarizes the findings as follows: “The decline in inflation will be tough.”
For the economy as a whole, this value fell, albeit not extremely sharply, from 16.3 to 14.7 points. Depending on the industry, however, there were striking differences. An above-average number of restaurateurs and retailers wanted to raise their prices. “In contrast, the price increase in industry has almost stopped,” said Wollmershäuser.
But that did not apply to all branches either: According to the survey, car manufacturers plan to raise their prices (plus 21.6 points), while paper manufacturers plan to lower them (minus 48.1). The service providers also stated on balance that they wanted to raise their prices further, even if the value fell a little.
In construction, on the other hand, according to the Ifo Institute, there are even greater price reductions – the price expectations fell from minus 8.3 to minus 10 points.
When it comes to the question of how to proceed, there are various images and ideas. Most economists have a downward curve in mind: the inflation rate will fall, but perhaps not far enough to satisfy everyone.
In contrast, a member of the Governing Council of the European Central Bank (ECB), Mário Centeno from Portugal, has raised the possibility that the ECB is now misjudging the fall in inflation in the euro area just as much as it previously did when it rose – and all at a faster rate done than expected.
Some analysts, on the other hand, warn of a “second wave” of inflation caused by higher wages – or even a “third wave” by companies that now also want to profit quickly from inflation, as Sutor Bank believes.
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