Germany Has First Monthly Trade Deficit Since 1991 on Inflation

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Germany's first monthly trade deficit in three decades was reported as companies faced higher costs for imports and softer demand for their products.

There was a 1 billion euro shortfall in May for Europe's biggest economy. The fall in cross-border sales was much more than expected.

Oliver Rakau, an economist at Oxford Economics, said that it was unsurprising that exports were declining. It's important to focus on imports and price developments.

Russia's invasion of Ukraine and China's Covid-related lockdowns arewreaking havoc on international supply chains, with substantial ramifications for Germany's export oriented economy.

The prices of imports like energy, food and parts used by manufacturers rose by more than 30% in May compared to a year ago, while those charged for exports increased at a slower rate.

Rakau said that foreign trade will still have a negative impact on German growth even if the data looks less remarkable.

The outlook for trade is bleak due to rising living costs and high uncertainty.

Harumi Ichikura assisted.