Upside Down: Normalisation of 'Inflation' in Germany and Austria Masks the Decay of Rational Thought

Also, it shows that the political caste has apparently lost all connection to reality for the majority of people. With winter around the corner, how do you think this will play out?

I’m a bit time-constrained today, hence I’m offering new statistical (official) data from Germany, as explained by my friend Peter F. Mayer over at tkp.at, sprinkled by some additional materials and the usual ‘bottom lines’.

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Manufacturer Prices in Germany Increase by 45.8 % Compared to Last Year

According to the Federal Statistical Office (Destatis), German manufacturing prices rose by almost 50% in September [2022] compared to the same month a year ago. Inflation, which conventionally lags behind manufacturing prices, stands at 10% right now.

‘August and September 2022 were thus the highest year-on-year increases in manufacturer prices since the survey began in 1949’, the statistics agency wrote.

The international competitiveness of small and medium-sized enterprises in particular, and of the German economy as a whole, will thus continue to deteriorate.

Manufacturer prices of industrial goods (domestic sales) in Germany rose by 45.8% in September 2022 compared to September of the previous year. According to the Federal Statistics Office, as in the previous month, this was the highest year-on-year increase since the survey began in 1949. Compared to the previous month (August 2022), producer prices rose by 2.3%.

The main reason for the increase in manufacturing prices was the rising cost of energy, Destatis added: electricity cost are 259.8% higher than a year ago.

According to Destatis, however, prices for all processed goods, capital goods, and consumer goods also rose significantly.

On average, energy prices were 139.0% higher in August 2022 than in the same month a year earlier. Compared to July 2022, these prices rose by another 20.4%. The highest impact on the year-on-year rate of change in energy costs came from price increases for electricity, which rose by 174.9%.

Electricity costs are up by 278.3 % compared to a year ago, and up 195.6 % for special contract customers. For commercial installations, which often enter into tariff-based contracts, prices were 12.9% higher than a year earlier. In a month-on-month comparison, prices for electric power across all customer groups rose by 26.4% in August.

Natural gas costs more than three times as much as in August 2021 (+209.4 %), with power plants paying 269.1% more for natural gas than a year earlier. For industrial consumers, natural gas was 264.9% more expensive and for retailers 236.8%. Prices increased slightly less for consumers of smaller quantities (trade and retail costs are up by +90.9%, households +83.8 %). Compared to the previous month of July 2022, natural gas became 24.6% more expensive across all customer groups.

On the Causes for the Increase in Natural Gas Prices

Here you can see the development of the sport prices at the Dutch TTF (Title Transfer Facility), the most important trading place for EU gas, the so-called EU gas benchmark. TTF is a virtual platform for trading gas futures contracts between banks and other financial investors, i.e., ‘over-the-counter’ sales.

As can be seen, current spot prices are back at the about the level of October 2021, i.e., before any sanctions against Russian gas, compressor turbines, pipeline blow-ups, and the increased number of sanctions had anything to do with it. Note, however, that prices in October 2021 were already up by a factor of 10 compared to October 2020, apparently due to wild speculation in the EU deregulated spot markets.

We see that the massive energy price increases are caused by the neoliberal deregulation of the vital basic energy supply and have little to do with Ukraine and Russia.

Runaway Inflation as a Consequence

In the meantime, inflation has reached 10%. In September 2022, the consumer price index stood at 121.1, which means that consumer prices have risen by about 21.1% compared to the index year 2015. The result is a rapid impoverishment of the lowest income groups.

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Bottom Lines

The main take-away is—energy prices are political (doh).

Readers of these pages are aware of this basic fact of contemporary life. For references, please see:

More Bad News from the Upside Down: first thoughts on the evolving US (NATO) vs. Russia situation

In the title of my piece, I mentioned Austria, whose nat’l statistics office (Statistik Austria) shows slightly worse official data:

The CPI numbers are up similarly by +10.5%, but do note the HICP, which allows for European-wide comparisons, also uses 2015 as index year. And in this category, Austrian prices are up by 24.48% (which is even worse than Germany).

Furthermore, note the strange non-seasonality in the above data on Germany: rapid increases in March and July 2022 indicate that Russia’s military intervention in Ukraine as well as…something else (?) may be to blame.

Gee, if I only remembered what happened in June of 2022?

Oh, yes, there was a EU Council meeting (22-23 June) that reaffirmed Brussels’ ambition to commit economic, and hence socio-political, suicide. Just check out the infographics put out by the EU Council and note, in passing, that all the bad outcomes for Russia are labelled ‘forecasts’ (by the IMF, the World Bank, and the OECD, no less).

I move that we’ll see the ‘reality’ of these ‘forecasts’ before too long.

Finally, mention shall be made by data put out by none other than the woke-virtue-signallers over at Der Standard, which will update its readership on the daily movements of (spot) energy prices. Here’s how this political endeavour is framed:

That the energy transition must succeed has been clear not only since the Ukrainian war and its effects on the supply situation. Climate change has long made us realise that the future does not lie in fossil fuels. And yet the switch to renewable sources has been slow for the longest time.

Russia's invasion of Ukraine abruptly and unmistakably revealed how fatal dependencies in this sector of the economy can be. Our uncertainty about energy security rises and falls with the throttling of natural gas pipelines, and we are similarly powerless in the face of rising prices, while the electricity meter in the front room rotates unperturbed and the fuel flows through the pump hose.

For an informed public

Even if we cannot influence supply and prices, we Der Standard at least want to contribute to an informed public. That is why we have developed this energy radar, with which we record, partly on a daily basis, how the parameters on the energy market are developing - from the stock exchange prices on the natural gas, oil and electricity markets to the end customer prices of the energy suppliers and petrol stations, from the filling levels of the gas storage facilities to the status of the energy transition.

I’ll stop here, for this is simply too pathetic (and, we note in passing, the abject lack of Der Standard’s capacities for introspection, reflection, and, above all, irony).

Note, in particular, how high Diesel prices—which is indicative of further price increases for virtually everything—have risen: one litre of Diesel fuel costs 2.07 € (23 Oct.), which translates into US$ 9.41 per gallon; a year ago, prices stood at 1.39 € or US$ 6.32.

Diesel is used for everything ‘on the last mile’, and for much else at virtually every step of the way from production (e.g., farm machinery) to disposal (garbage trucks).

The well-off (as in: heavily subsidised) media personalities masquerading as Twitter mob, however, have other concerns, as evidenced by the editor-in-chief of (self-styled) alternative and Social Democrat-funded outlet Falter and acting journalist Florian Klenk noted:

I won’t link to guano island as a matter of policy, but if you’re there, why don’t you tell Mr. Klenk what you think of this?

A hot-dog with a non-organic sausage at 7.7 € is, well, quite something, sure enough.

Yet, the concerns of ‘ordinary’ people (no-one is ‘ordinary’) and how they are coping, well, that thought didn’t cross Mr. Klenk’s mind.

Here’s how ‘ordinary’ people get through the month: micro-credit lines of around 300 € to cover essential goods, such as food purchases, as reported by Austrian newspaper Kurier four days ago.

Let ‘em eat, well, what exactly? We’ll soon figure out how the proverbial Marie Antoinettes’ of Europe’s soon to be former Old Régime will fare around Christmas.