The Ukraine war pushed inflation in Germany to its highest level in more than 30 years. From March to May, prices rose by more than seven percent. These products are the most affected.
The price for the fictitious shopping basket, which the Federal Statistical Office uses to measure the inflation rate, rose by 4.2 percent. It last took several years for this increase, now it happened in just three months from January to April. Increased energy prices have affected almost all sectors of the economy, along with supply bottlenecks and increased raw material prices. Some products and product groups stand out from the shopping cart, the costs of which have increased particularly sharply. It’s not always what you would expect.
LPG leads the negative hit list by a clear margin. LPG is mainly used for gas heating. The price increase here has been clearly noticeable for many consumers, especially in the past, cold months. The price increase for liquid gas is based on the price increase for natural gas on the world market. At 73 percent, this has increased even more since the end of January. Prices are likely to fall again somewhat in the summer because less gas is needed for heating. In winter it could then go up again steeply until the supply in 2023 is better secured with the new Qatar partnership and liquid gas terminals on the North Sea.
The second place is not surprising either. Heating oil is increasing in price for the same reasons as LPG. Although the supply from Russia is still secured, oil traders have to conclude contracts for deliveries in several months. In doing so, they calculate the risk that Russia will supply less oil by then or that Western countries will decide on a trade embargo on Russian oil. The EU is actually planning one by the end of the year. Federal Economics Minister Robert Habeck (Greens) assumes that Germany will be independent of Russian oil by then. However, that will not help much if world market prices in winter rise as strongly as they have recently. The barrel price for the North Sea variety Brent has shot up by 27 percent since January.
Yay, holiday countries are finally opening their borders again. Oh no, the summer vacation is significantly more expensive than in previous years. The joy of an end to the corona pandemic in international tourism is clouded by high prices. Travel abroad is even a bit more of a factor than domestic travel. The reason is simple: no matter where you want to go, you have to get there somehow. When traveling abroad, the airplane is often the means of choice, but with oil prices also rising significantly. The airlines pass this on to passengers. For this reason, Lufthansa has already raised its ticket prices within Europe by a flat rate of 10 euros, for long-haul flights it can cost up to 200 euros more. Travel to Asia is also becoming more expensive because the flight routes are longer. After Japan, China and Korea, the shortest flight usually goes via Ukraine – which is now being bypassed for obvious reasons.
The higher oil prices are also noticeable at the gas station. Petrol and diesel are classified by the Federal Statistical Office in one group with motor oil and LPG. At 23.5 percent, diesel prices rose slightly more than premium petrol (21.5 percent). This will remain so as long as the oil price does not fall significantly. However, the developments of the past few months have shown that oil companies are quick to pass on higher commodity prices to motorists, but not falling oil prices. Relaxation at the pump can therefore be a long time coming.
Russia and Ukraine were the top two producers of sunflower and rapeseed oil until February. But since the outbreak of war, vegetable oil has also been in a price crisis because deliveries from the two war-torn countries have stopped. Ukraine can hardly export oil anymore, Russia stopped exporting in April. Since nothing has changed in the global demand for edible oils, prices have risen significantly. This also applies to a lesser extent to other edible oils. Here, some countries have introduced export tariffs, such as Argentina (on soybean oil) and Indonesia (on palm oil) to limit exports. Falling prices are therefore not to be expected for the time being.
Instead of frying with sunflower oil with good German butter, it doesn’t get any cheaper. The Lebensmittel-Zeitung recently determined that the 250-gram pack of butter now costs more than two euros, and some types even more than three euros. The dairies say that they are only passing on additional production costs. On the one hand, this applies to the fuel for transport, but on the other hand also to fertilizers and animal feed, which were often obtained from the Ukraine or Russia and whose export is now restricted. In fact, the price of fertilizer has risen sharply around the world because its production relies on natural gas.
Those who prefer to have their meat on the grill instead of in the pan are not getting cheaper at the moment. The prices for three of the four most important types of meat have risen significantly. Only poultry (5.4 percent) does not participate. The reasons for the sharp price increase are the same as for butter: the cost of animal feed and fertilizers has risen sharply worldwide, making production more expensive for local farmers. They pass these costs on to consumers. Andreas Köhr from the Farmers’ and Winegrowers’ Association of Rhineland-Palatinate South explains that high-quality animal feed is often a by-product of the production of vegetable oils, which, as mentioned above, has come to a standstill in Ukraine and Russia. The high meat prices are having an effect: manufacturers expect that consumption in Germany could fall by up to ten percent this year.
After long-haul flights, the prices for trips by ship increase the most. This includes both cruises and ferries, for example on rivers, the North Sea and the Baltic Sea. The price driver here is quickly explained: Ships run on oil. Although they mostly use heavy fuel oil, which is cheaper than petrol and diesel, the price of which has risen significantly since January.
Not only that you can no longer fry meat cheaply, you should also avoid potatoes as a side dish if you want to save money. The crops grown in Germany are becoming more expensive for the same reasons as many other agricultural products: fertilizers have risen sharply in price because they are made from natural gas, and transport costs are also higher, although those for potatoes should be lower than for other products. In addition, with potatoes, the harvest in autumn 2021 – from which most of the tubers now offered in the supermarket still come – was very poor. The rainy summer of 2021 caused yields to drop by up to 40 percent in some cases. As early as September, industry representatives therefore estimated that potato prices would rise significantly this spring.
Noodles are also out as a cheap side dish this summer. No wonder, since they are made from grain and eggs, two products that have also risen sharply in price. In the case of pasta, the price increases for wheat play a particularly important role. Although Germany hardly imports from Ukraine and Russia, the two countries are two of the top 10 producers worldwide. Since exports fail, world market prices rise and pasta producers based in Germany also have to pay for them.
Egg prices have risen by an average of 2 cents per egg. That doesn’t sound like a lot, but it makes a big difference in relative terms. The farmers have the same concerns here as with other agricultural products: higher prices for operating the stables and transporting the eggs, as well as more expensive feed because deliveries from Ukraine have stopped. Organic feed in particular is becoming scarce here. But the poultry farmers have another problem: there is a lack of young hens. A wave of avian influenza swept across Germany last November, resulting in tens of thousands of hens either dying of the disease or being killed as a precaution to prevent spread. However, fewer hens also mean fewer eggs – and correspondingly higher prices.
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