Despite a slight decline in November, inflation in Germany has remained stubbornly high and is affecting more and more areas of daily life. Consumer prices rose 10.0 percent month-on-month in November. The Federal Statistical Office confirmed an initial estimate on Tuesday. In October, the annual inflation rate reached 10.4 percent, its highest level in about 70 years. Economists see no reason to give the all-clear in the weakening in November.
“Despite a slight relaxation in energy prices, the inflation rate remains at a high level of 10.0 percent,” said the President of the Wiesbaden authority, Georg Thiel. “We are also increasingly seeing price increases for many other commodities in addition to energy.”
High rates of inflation reduce the purchasing power of consumers and eat away at growth in income. People can afford less for one euro. In a YouGov survey of more than 2,000 people in Germany in November, 23 percent said they had mostly or always had difficulties shopping for groceries in the past three months. More than half (59 percent) have already cut back on their usual expenses. A good two-thirds (67 percent) of consumers expect to reduce or further reduce their spending.
Energy 38.7% more expensive than in the same month last year
Inflation in Europe’s largest economy has been fueled by high energy and food prices for months. Energy cost 38.7 percent more in November than a year earlier. The price increase weakened somewhat after growth of 43 percent in October.
Consumers had to pay 21.1 percent more for food than in November 2021. According to the information, price inflation has gradually increased here since the beginning of the year. Edible fats and oils became significantly more expensive within a year (plus 41.5 percent), there were also noticeable increases in dairy products and eggs (plus 34.0 percent), bread and cereal products (plus 21.1 percent) and vegetables (plus 1 percent).
Annual inflation weakened somewhat for the first time since July. In the summer, temporary measures such as the 9-euro ticket and the fuel discount had dampened the upward trend in prices. Most recently, however, many economists did not expect a more significant decline in annual inflation until spring. Bundesbank President Joachim Nagel assumes that the inflation rate in Germany will remain high in the coming year. “I think it’s likely that the annual average will be seven before the decimal point,” he said recently.
Compared to the previous month, consumer prices fell by a total of 0.5 percent in November.
Relief packages worth billions
The federal government wants to cushion the burdens on consumers and companies caused by the high energy prices with relief packages worth billions. This also includes the gas and electricity price brakes planned for next year. In December there is a one-off emergency aid for gas and district heating customers. You don’t have to pay an advance this month. The federal government bears the costs.
Inflation rates at the current level have never existed in reunified Germany. In the old federal states, rates of around 10 percent and above were measured in the early 1950s. However, the calculation method has changed over time.
The European Central Bank (ECB) is now fighting the high inflation in the euro area with a series of interest rate hikes. Another hike is expected at the Governing Council meeting this Thursday. The currency watchdogs are aiming for medium-term price stability with an inflation rate of two percent for the common currency area of the 19 countries. In Germany, the HICP index, which is decisive for the monetary policy of the central bank, was 11.3 percent higher in November than in the same month last year.
