According to analyst at 365.bank Jana Glasová, producer prices are rising due to the material crisis.
In July, industrial producer prices for the Czech Republic rose by 5.5 percent year on year. Prices of water and waste supply increased by 7 percent, mining and quarrying by 6.6 percent, industrial production by 6.4 percent and electricity and gas supply by 3.7 percent. This follows from the data of the Statistical Office of the Slovak Republic.
Industrial producer prices continue to rise
In industrial production, year-on-year prices of coke and petroleum products increased by 47.9 percent, chemicals by 22.5 percent, metals by 18.3 percent, wood products by 16.8 percent, other production by 4.3 percent, electrical equipment by 2 .8 percent, food by 2.7 percent, pharmaceuticals by 1.8 percent and rubber and plastic products by 0.7 percent. Prices of transport equipment fell by 2.9 percent, computer products by 1.5 percent, machinery not elsewhere classified by 1.2 percent and textiles and leather by 1.1 percent.
Industrial producer prices for exports rose by 9.2 percent in July. Prices of water and waste supply were higher by 71.7 percent, mining and quarrying by 26.9 percent, electricity and gas prices by 12.9 percent and industrial production by 8.9 percent.
In industrial production, year-on-year export prices of coke and petroleum products increased by 50 percent, metals by 27.2 percent, chemicals by 22 percent, computer products by 20.2 percent, wood products by 14.8 percent, electrical equipment by 7 percent, rubber and plastic products by 5.8 percent, machinery not elsewhere classified by 4.6 percent, other manufacturing by 3.9 percent and food by 1.5 percent. Prices of pharmaceutical products decreased by 0.4 percent, textiles and leather by 0.3 percent and means of transport by 0.2 percent.
Building materials are also growing
Compared to June, construction work prices in July 2021 increased by 2 percent. Compared to July 2020, they increased by 5.5 percent. On average, construction work prices have risen by 1.1 percent year on year since the beginning of the year. The Statistical Office (SO) of the Slovak Republic informed about it.
Prices of materials consumed in construction in July 2021 increased by 3.3 percent compared to June. Compared to July 2020, they increased by 12.5 percent. On average, since the beginning of the year, the prices of materials consumed in construction have increased by 5 percent year on year.
What caused the material crisis?
According to analyst at 365.bank Jana Glasová, producer prices are rising due to the material crisis. The global economy is currently struggling with a shortage of more raw materials and supplies. In the first place, according to her, there is a lack of chips, which causes production downtime, especially in the automotive and electrical engineering industries. “We assume that the missing chips will bother car manufacturers all this year and probably at the beginning of next year,” said Glasová.
Another major problem for industry, according to the analyst, is the lack of plastic granulate, which is used in most industries, including automobiles. The market is also reporting problems with a shortage of sheets, metals, wood, glass and also building materials. “The material crisis is mainly caused by the slowdown of production during the crisis and the slower start of production after the pandemic. Many of the world’s producers faced production problems during the crisis due to quarantine measures and staff shortages. Weak supply and growing demand are now pushing up the prices of these products and materials, ”added Glasová.