On Wednesday, Bloomberg reported: “German Import-Price Inflation Accelerates to Fastest in More Than 29 Years.” The various statistics on inflation in Germany are eye-popping:

• Import-price inflation accelerated to 12 percent, the highest rate since October 1981, from 10 percent in November
• In the month, prices increased 2.3 percent, almost double the 1.2 percent forecast by economists
• Energy was 34.2 percent more expensive in December than a year earlier
• Iron ore prices soared 98.4 percent
• Non-iron ore metals cost 37.9 percent more
• German consumer-price inflation accelerated to 1.9 percent last month, pushing the euro-area rate to 2.2 percent, the first time it has breached the ECB’s 2 percent limit in more than two years

For those of us who never believed that deflation was a serious threat given the monetary actions of central banks across the globe, we must now wonder how much longer will it take for inflation to start hitting consumers across a broad array of purchased goods.

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According to Wikipedia, “iron ore is the raw material used to make pig iron, which is one of the main raw materials to make steel.”

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The world’s largest miners are pushing for increases of 10% to 25% over this year’s contract prices for iron ore and coal, people familiar with the nascent negotiations said, which would raise costs for the steel used in cars, construction, appliances and other goods.

China, which consumes about 65% of the world’s seaborne iron ore, is trying to use its size to push for lower or flat prices on iron ore and coal—two chief ingredients in steel.

But the people familiar with the talks among steelmakers and miners BHP Billiton, Rio Tinto and Brazil’s Vale SA said steel demand is rebounding and iron-ore supplies are tightening, setting the stage for a near-certain price increase.

By the time both sides settle, probably in April, steelmakers could pay $70-$75 a metric ton for iron ore. Steelmakers have been paying about $65 a metric ton this year.

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