The Ukraine war is fueling the already high energy prices. People in Germany have to adjust to further increases in consumer prices.
After a jump in prices in February, people in Germany have to be prepared for further increases in inflation rates due to the war in Ukraine.
Fueled by expensive energy, consumer prices increased by 5.1 percent in February compared to the same month last year, according to the Federal Statistical Office. The annual rate of inflation thus passed the five percent mark again. The Wiesbaden authority confirmed an initial estimate on Friday.
As the Russian attack on Ukraine pushes up commodity prices around the world, economists say inflation will continue to rise for the time being. Some economists do not rule out a seven to the decimal point in the inflation rate in the coming months. Higher inflation weakens the purchasing power of consumers because they can then buy less for one euro than before.
The annual inflation rate was 4.9 percent in January 2022 and 5.3 percent in December 2021. Compared to the previous month, consumer prices rose by 0.9 percent in February. “The corona-related effects are increasingly overshadowed by the effects of the attack by Russia on Ukraine,” explained Georg Thiel, President of the Federal Statistical Office. However, the current price increases, especially for mineral oil products, are not yet reflected in the February results.
“The inflation rate is likely to remain above the 7 percent mark at least until the summer, even if the situation on the energy markets begins to relax from the middle of the year,” expects Commerzbank chief economist Jörg Krämer.
According to Sebastian Dullien, there is a risk of inflation in Germany averaging well over 5 percent for the year as a whole. “This would put inflation at the highest level since the second oil price shock in the early 1980s,” said the scientific director of the Institute for Macroeconomics and Business Cycle Research of the trade union Hans Böckler Foundation. “Should there even be an import embargo or an import ban on Russian energy supplies, inflation is likely to be quite a bit higher.”
In February, fuel cost 25.8 percent more than a year earlier. Light heating oil rose in price by 52.6 percent, natural gas by 35.7 percent and electricity by 13 percent. The CO2 tax, which rose at the beginning of the year from 25 euros to 30 euros per tonne of carbon dioxide, which is produced when diesel, petrol, heating oil and natural gas are burned, also had an effect. Excluding energy, February inflation was reported to have been 3.3 percent.
Fresh vegetables in particular became more expensive
Consumers also had to dig deeper into their pockets for food (plus 5.3 percent). Fresh vegetables in particular (plus 11 percent) and dairy products and butter (plus 6.7 percent) became more expensive within a year.
Goods and services also rose significantly in February in the euro area. Consumer prices were 5.8 percent above the level of the same month last year. This is the highest value since the introduction of the euro as a settlement currency in 1999. The stubbornly high inflation is also causing concern for the European Central Bank (ECB), which is aiming for a stable common currency with a price increase of 2 percent in the medium term.
Europe’s currency watchdogs are therefore heading towards an end to their ultra-loose monetary policy, despite new risks for the economy due to the Ukraine war. The ECB is reducing its billion-dollar bond purchases earlier than planned and is planning to end them in the summer, as the Governing Council decided on Thursday. However, the central bank left open when interest rates in the euro area will rise again.
Politicians are also concerned with the rising energy prices. North Rhine-Westphalia’s Prime Minister Hendrik Wüst (CDU) reiterated his call for an energy price brake: “A warm apartment must not become a luxury. People in rural and suburban regions also have to stay mobile,” he told the Rheinische Post.
According to Commission President Ursula von der Leyen, the EU Commission wants to propose a temporary cap on energy prices because of the effects of the Ukraine war.
Source: Stern
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
