Germany just registered inflation rate at 7.9%, the highest level since 1952. The inflation data was published by the German statistical agency Destatis. It is the highest rate of inflation since German reunification and a level similar to that seen in 1973/1974 following the oil crisis.
Destatis in its statement pointed to the war in Ukraine and rising energy prices as being behind the record level of inflation. In addition to that another factor with an upward effect on prices is interruptions in supply chains caused by the Covid-19 pandemic. Energy prices increased by 38.3% over the same time last year, while the price of food increased by 11.1%.
The inflation in May was up by roughly one-tenth over the already record-breaking rate in April 2022.
The effects of inflationary pressure are being felt across the EU and the world, with the worst impacts hitting the poorest in wealthy countries and wreaking havoc in some of the world’s most vulnerable economies. Consumers are left eroded purchasing power when prices hike.
Meanwhile, Analysts have predicted that Europe as a whole will see an average rate of inflation of 6% in 2022.
The said report released just 10 days before ECB meeting where officials are set to announce the conclusion of large-scale asset purchases and confirm plans to raise interest rates in July for the first time in more than a decade. Some policy makers have even floated the idea of a half-point hike, rather than a quarter-point increase.
The inflation figures add pressure on the government as households’ purchasing power is further dampened. On Monday, Finance Minister Christian Lindner has called the fight against surging prices the “top priority” while advocating an end to expansive fiscal policy.
“Inflation is an enormous economic risk,” Lindner was quoted as talking to the press.
“We must fight it so that no economic crisis results and a spiral takes hold in which inflation feeds off itself.”
