Why inflation is rising in Germany: the main factors
The German government statistics office has published disappointing economic results for the country. Last month inflation in Germany reached 7.9%, which is the highest level in almost 50 years. Moreover, the increase in prices for various groups of goods has remained at a record level for three months.
Experts call the main reason for this situation an increase in energy costs. However, the rise in prices of other goods is also observed, which also contributes to rising inflation. According to analysts, the last time such indicators in Germany were recorded was in the winter of 1974 when the oil crisis was raging.
Last month the cost of energy increased by 38.3% compared to the prices of the previous year. The rise in price primarily affected fuel oil – by 94.8%. The price of natural gas also rose significantly – by 55.2%. The cost of motor oil has increased by 41%. Accordingly, electricity tariffs have increased by 21.5%. These dynamics were caused by the geopolitical conflict in Europe, which disrupted the supply chain, and many countries had to find new importers of raw materials. In addition, the size of the carbon tax increases. Now the tariff per ton is 30 euros, together with the previous 25 euros.
As for product inflation, it reached more than 11%. This value is considered the highest since the reunification of Germany. Vegetable oils and fats rose the most, with a price increase of 38.7%. The cost of meat and its products increased by 16.5%, and dairy products – by more than 13%.
Prices for non-food categories of goods also went up. For example, vehicles went up by about 9% and digital appliances by 8%. In general, consumer goods showed an increase of 18%. All of this led to an increase in the cost of various services and rents.
In order to slow inflation, the EU Central Bank has decided to raise the interest rate. This change was quite significant for the EU, as the rate was increased for the first time since 2011. The government hopes that this step will avoid an economic crisis.
In addition, to support households, the authorities plan to introduce additional payments for families with children, which will help offset the cost of paying for electricity.
At the same time, experts note that inflation will continue to rise in the future, as world commodity prices continue to increase. Therefore, the European Union should already now develop a crisis package of measures in order to be prepared for the worst scenario.