Inflation in Germany has accelerated again for the first time since February. According to initial data from the Federal Statistical Office, consumer prices rose by 6.4 percent in June compared to the same month last year. In May, the annual inflation rate was still 6.1 percent.
Since February, inflation had steadily weakened from a high level for three months in a row. In February, the rate of inflation was 8.7 percent, the same as at the beginning of the year. Compared to May, consumer prices rose by 0.3 percent in June.
The high inflation that has been going on for months is a burden for consumers. It saps their purchasing power, people can afford less for one euro. “Continued high inflation rates of currently around six percent are nipping at the purchasing power of households and are preventing private consumption from making a positive contribution,” said GfK consumer expert Rolf Bürkl recently. Private consumption is an important pillar of the German economy.
According to GfK, the fear of further rising inflation and a recession – i.e. a contraction in economic output – has recently caused consumer sentiment in Germany to sink again. Economists had expected inflation to rise in June.
The European Central Bank (ECB) is fighting the high inflation in the euro area with a series of interest rate hikes. Higher interest rates make loans more expensive. This can slow down demand and counteract high inflation rates. In the medium term, the ECB is aiming for price stability in the euro area with an inflation rate of two percent (dpa)