German import prices rise most in four decades on supply woes

Bloomberg

Germany is seeing its biggest surge in imported inflation since the early 1980s, putting a price tag on the difficulties businesses are facing to secure inputs amid a worsening supply squeeze.
In July, goods arriving in the country from abroad were 15% more expensive than a year ago, data show. The cost of basic goods increased about 19% and energy jumped nearly 90%. The latter reflects a slump in prices in 2020 when the pandemic shut down the economy and eroded demand.
With shipping disrupted by resurgent coronavirus infections and port closures, manufacturers in particular are struggling to keep up, and are increasingly passing on higher costs to customers.
Consumer prices probably accelerated 3.4% this month, according to a survey ahead of data. That’s well above the European Central Bank’s 2% target for the euro area, though policy makers say the current spike will be temporary.
The fraying of global supply chains is weighing on prospects of world’s economic recovery.
In Germany, Europe’s largest economy, it has caused business confidence to drop for a second month in August, fuelling concerns that upbeat growth forecasts for this year may be revised lower. The country’s central bank predicted an expansion of 3.7% in June.
Meanwhile, demand for physical bullion in Germany, traditionally the biggest coin and bar buyer in Europe, was the highest since at least 2009 in the first half, World Gold Council data show. While purchases in other Western markets have also been strong, Germans in particular are pouring into the metal as a hedge against rising inflation — and dealers say business remains good.