High energy and food prices have been driving inflation for months. There are no signs of a thorough easing in prices for the time being.
Inflation in Germany remains high at the beginning of the current year. Consumer prices rose by 8.7 percent in January compared to the same month last year, as the Federal Statistical Office announced on Thursday in an initial estimate. According to earlier data, the annual inflation rate was 8.6 percent in December and 10 percent in November. However, changes could result from a regular revision. The recalculated data and final results for January are scheduled to be released on February 22nd.
Compared to December, consumer prices rose by 1.0 percent in January. Rising energy and food prices have been driving inflation for months. Higher inflation rates reduce the purchasing power of consumers, who can afford less for one euro. People’s financial leeway is shrinking. This can weigh on consumption, which is an important pillar of the economy.
Economists are currently not expecting a thorough relaxation in consumer prices in the current year. “It would be dangerous to think that we are already done and that the inflation problem is over,” Bundesbank President Joachim Nagel recently told the “Börsen-Zeitung”.
The federal government expects an average inflation rate of 6.0 percent in Europe’s largest economy for the current year. The electricity and gas price brakes would have a dampening effect. However, the state cannot cushion all consequences. “Despite the relieving effects of the extensive state support measures, the real loss of income and purchasing power associated with the high price increases will weigh on domestic economic development,” said the government’s most recent annual economic report. Above all, private consumption is likely to drop noticeably.
Last year, the inflation rate reached an average of 7.9 percent, its highest level since the founding of the Federal Republic. However, the calculation method has changed over time. In 2021, consumer prices had increased by 3.1 percent compared to the previous year. (dpa)