Goods and services cost an average of just 7.6 percent more than a year earlier, as the German Federal Statistical Office announced on Wednesday. Economists surveyed by Reuters, on the other hand, had expected an increase to 8.0 percent. In May, the inflation rate was 7.9 percent, the highest since the winter of 1973/74.
At 38.0 percent, the price of energy in the month just ended was not quite as high as in May at 38.3 percent. Food, on the other hand, cost 12.7 percent more than in June 2021. Here, the upward trend in prices accelerated (May: +11.1 percent). 2.1 (May: +2.9) percent more had to be paid for services.
Experts do not see a sustained relaxation in prices for the time being. “You shouldn’t let sand be thrown in your eyes,” said DekaBank chief economist Ulrich Kater. Only from January 2023 is it likely to go down if new crises do not break out.
Perceived inflation rate at almost 18 percent
According to Kater, prices are rising more than twice as fast as officially measured: the perceived inflation rate is currently almost 18 percent. “That’s also historically high.” Many households would have to resort to savings to make ends meet.
“It is probably more of a breathing space and not a turning point in inflation,” said the chief economist at asset manager HQ Trust, Michael Heise. Government measures such as fuel discounts and nine-euro tickets would have reduced the price increase by around 0.9 percentage points, but will expire again in August. “Inflation is likely to peak in September,” Heise therefore expects. Commerzbank chief economist Jörg Krämer sees it this way: At the latest when this relief ends in September, inflation should jump up again,” he emphasized passed on to consumers.”
More than half want to limit themselves
According to a study, more than half of Germans with lower incomes want to buy less groceries because of high inflation. According to the Institute for Macroeconomics and Business Cycle Research (IMK) of the trade union-affiliated Hans Böckler Foundation, around 52 percent of the labor force with a relatively low household income of up to 2,000 euros net per month feel compelled to cut back on food due to the increased prices, especially for energy . Among them, around 18 percent even want to “significantly” reduce the consumption of food, beverages, tobacco products and the like.
The German government had put together a package worth billions to ease inflation. The energy tax on fuels, for example, has been reduced to “the European minimum” for a limited period of three months since June 1, which, according to the Ministry of Finance, means 30 cents per liter less for petrol and 14 cents for diesel. At the same time, a ticket for nine euros per month was introduced for 90 days on public transport. Many social politicians and economists are calling for further relief, especially for low-income households.
In view of the record high inflation in the monetary union, the European Central Bank (ECB) intends to raise its key interest rate in July for the first time since 2011 and to do so again in September. This increases the cost of borrowing for both consumers and businesses, which is likely to further impact consumption and investment. This in turn could add to the already weakening economy.
Source: Nachrichten
