Pedestrian zone in Hanover: prices rise noticeably
Photo: Swen Pförtner / DPA
Fueled by higher energy prices, inflation in Germany exceeded the 4 percent mark for the first time in almost 28 years.
According to preliminary data from the Federal Statistical Office, consumer prices rose by 4.1 percent compared to the same month last year.
The Wiesbaden authority last determined a four to the decimal point in December 1993, when it was 4.3 percent.
For months, inflation has been driven by rising energy prices. In addition, the withdrawal of the temporary VAT reduction is now fully effective. In order to stimulate consumption in the corona crisis, the federal government had temporarily reduced VAT from July 1, 2020 to December 31, 2020. The regular VAT rates have been in effect again since January 2021, so goods and services tend to be expensive again.
Inflation rates of around five percent in Germany are considered possible this year.
However, many economists continue to regard the rise in inflation as a temporary phenomenon.
You currently do not see the increased risk of a long-term price spiral.
"The latest collective bargaining agreements in Germany offer no evidence of a wage-price spiral," said Jörg Zeuner, chief economist at the Union Investment fund company.
In the coming year, according to economists, inflation is likely to weaken again.
mik / dpa