Inflation in Germany hits 7,3 percent, highest rate since 1981
Inflation in Germany surged to a 40-year high in March, according to preliminary figures released by the Federal Statistical Office (Destatis). The swell in prices is being driven by the war in Ukraine and the resulting volatility on the energy market.
Consumer prices rose 7,3 percent year on year in March 2022
Consumer prices in Germany in March 2022 were 7,3 percent higher than in the same month last year, Destatis announced on Wednesday. This is a significant jump from the 5,2-percent inflation rate recorded in February, and the highest rate recorded in the western (old) federal states since autumn 1981, when mineral oil prices rose significantly during the First Gulf War.
“Since Russia’s attack on Ukraine, the prices of natural gas and mineral oil products have markedly increased again and have had a considerable impact on the high rate of inflation,” Destatis wrote in its report.
War in Ukraine is driving price jumps
The war and the worldwide economic uncertainty it is causing are having a major effect on prices. According to preliminary data, people in Germany had to spend 39,5 percent more on energy and fuel in March than in the same month last year. The cost of food also rose by 6,2 percent since last year.
Companies are also struggling with rising raw material prices and logistical difficulties. According to a recent survey by the Ifo Institute in Munich, more companies are planning to raise their prices in the next three months than ever before in the survey’s history.
Economists are not expecting the situation to ease any time soon. “In the case of gas and electricity, the pressure could [even] increase a little, since consumer prices are only gradually being adjusted,” Holger Schmieding from Berenburg, a bank in Hamburg, told the Frankfurter Allgemeine Zeitung. “The rate can also rise for food, since the prices for grain and other raw materials are only included in the price of finished food with a time lag.”
According to the German Council of Economic Experts, people may have to adjust to permanently higher energy prices as a result of the Ukraine war. As Germany tries to shift its supply away from Russian sources, costs will rise in the long term.
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