Due to the war in Ukraine and rising energy prices, inflation in Germany rose to 7.3 percent in March. The Federal Statistical Office in Wiesbaden announced on Wednesday that this is the highest level since November 1981. Inflation is therefore far from the two percent that the European Central Bank (ECB) considers ideal for the economy in the medium term.
Economists polled by Reuters had only expected an increase to 6.3 percent, from 5.1 percent in February. “The fact that inflation rose to 7.3 percent in March is mainly due to the war in Ukraine, which caused the price of heating oil and gasoline to rise,” said chief economist Jörg Krämer of Commerzbank. “Inflation is here to stay.” Helaba expert Ralfcircul explains that development is mainly driven by energy and food. “In addition, the price increase is also broad-based.”
Energy has become 40% more expensive in a year
The Russian invasion of Ukraine is causing energy and commodity prices to rise dramatically. In March, energy prices rose by almost 40 percent for the entire year. Consumers already feel this when refueling and heating up.
In the most populous state of North Rhine-Westphalia alone, inflation rose to 7.6 percent in March, the highest level since 1973. In Hesse, inflation rose to 8.0 percent, the highest level in 48 years. In NRW, fuels were already almost 50 percent more expensive in March 2021 and heating was almost 40 percent more expensive.
Food became more expensive all over Germany
Edible fats and oils, at about 20 percent, and vegetables, at a good 14 percent, also rose above average. In Bavaria inflation was only five percent if you exclude heating oil and motor fuels. Across Germany, food prices rose by more than six percent and services by 2.8 percent, while goods were 12.3 percent more expensive.
Companies also have to contend with high inflation. “Companies and service providers are increasingly passing on higher oil and gas prices to their customers,” said Thomas Gitzel, chief economist at BP Bank. This means that the price increase gains in breadth. “Therefore, it should now be expected that significantly higher wage demands will offset inflation.”
Many companies want to increase their prices
Higher costs are driving more companies than ever before to raise their prices over the next three months. This is the conclusion of a study by the Ifo Institute in Munich. “Russia’s attack on Ukraine is not only pushing up energy costs, but also the prices of many agricultural commodities,” said Timo Wollmershäuser, Ifo’s head of economics. “This means inflation is likely to rise well above five percent this year.” That last happened in Germany more than 40 years ago, when inflation rose to 6.3 percent after the second oil price crisis in 1981.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
