German Wholesale Prices Soar 4%, Biggest Jump Since October 2011

Two weeks after Germany reported a spike in consumer prices, which jumped 1.9% from a year ago, the biggest annual increased since July 2013...

... overnight Germans got another price shock when the Federal Statistics Office reported that Wholesale Prices rose a China-like 0.8% MOM in January, and advancing 4% year-on-year in January, up from the "mere" 2.8 percent increase in December, and the fastest growth since October 2011, when prices gained 4.1%.

The biggest culprit: prices of solid fuels and mineral oils surged 16.4% from a year ago, although many core products also saw a substantial increase.

The surge in German inflation, at both the consumer and wholesale level since the end of last year is fast becoming a political flashpoint in the country, which faces elections in September, as savers remain burdened with near-zero deposit rates. Calls are mounting for the ECB to start talks over winding down its bond-buying program, which is scheduled to run until at least the end of this year. Last week, ECB policy makers have said they would likely not bring up the topic of further tightening or tapering until at least the middle of 2017, which means that regardless of how high prices rise, Germans willhave to bear with it.

At the end of January, the ECB further antagonized German shoppers when Ewald Nowotny, governor of Austria’s central bank, said “monetary policy can’t just cater to one country but to the entire euro-zone economy,” adding that "German developments are watched, but they are just a part.”

Nowotny said that while the ECB’s Governing Council will “surely” have to take a decision on the future of quantitative easing before the end of 2017, he doesn’t expect that to happen until after the summer.

Will Germany's conservative population remain as patient as the ECB (and Angela Merkel) hopes it will, especially with major a political event on the horizon? We don't know, although for an example of what happened to some less "patient" societies when inflation surged as much as it did last time, look no further than the African Spring, when soaring living and food costs, sparked the biggest series of revolutions (some with the implied assistance of the CIA) in recent history.