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Man in the supermarket: »Price increases in almost all areas«
Photo: INA FASSBENDER / AFP
Life in Germany has become noticeably more expensive in recent months.
And economists give consumers little hope that prices will fall again quickly.
In May, consumer prices were 7.9 percent above the level of the same month last year, as calculated by the Federal Statistical Office.
Inflation rates at the current level have never existed in reunified Germany.
In the old federal states you have to go back to the winter of 1973/1974 to find similarly high values.
At that time, energy prices had risen as a result of the first oil crisis.
Higher inflation rates reduce purchasing power.
Consumers can then afford less for one euro.
The energy factor also plays an important role in the current inflation rates.
In May, people in Germany had to pay 38.3 percent more for energy than a year ago.
Heating oil was almost twice as expensive as in May 2021. Natural gas became more expensive by more than half.
The prices for fuel (41 percent) and electricity (21.5 percent) also rose significantly.
There is no relief in sight
"The details of the record inflation in May show once again that inflation in Germany is being driven for the most part by external influences and has little to do with the German economy overheating," said Sebastian Dullien, scientific director of the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation.
When it comes to food prices, it is also primarily global factors that are currently driving prices.
With the delivery failure from Ukraine and the sanctions against Russia, grain prices have risen massively.
"This is now reflected in higher prices for products such as flour, pasta, but also eggs and meat, since a significant part of the grain from Ukraine and Russia was used as animal feed," said Dullien.
The Federal Statistical Office reported that food prices rose by 11.1 percent in May compared to the same month last year.
This means that prices rose sharply again after 8.6 percent in April.
Edible fats and oils (plus 38.7 percent) as well as meat and meat products (plus 16.5 percent) stood out in particular.
There are "price increases in almost all areas," the statisticians determined.
A trend reversal is not in sight in the short term, said economist Dullien.
»Since there are no signs of easing in the prices for energy and food on the world market, inflation in Germany is likely to remain high in the coming months at least until the end of the year.«
Özdemir predicts that food prices will continue to rise
Federal Minister of Agriculture Cem Özdemir (Greens) also expects food prices to continue to rise in Germany.
"Unfortunately, a lot is yet to come," said Özdemir of the "Rheinische Post".
The food industry, for example, has long purchasing deadlines for energy.
"We have to expect increases in autumn and winter because the trade now has to supply itself with expensive energy and the price increases are passed on to the customers."
Özdemir had proposed reducing VAT on certain food products.
“There can be no serious dispute that the current VAT system needs to be fundamentally reviewed,” he said.
The minister suggested tackling a reform “cross-party” and turning the system upside down.
»Logic, simplicity and sustainability are the keywords.
Then you quickly end up with my suggestion,” said Özdemir.
Additional data from statisticians show that food prices are likely to continue to rise.
Producers of agricultural products raised their prices at record speed in April.
They rose by an average of 39.9 percent, as reported by the Federal Statistical Office.
This is the highest price increase compared to the same month last year since the survey began in 1961. In March there was already a record of 34.7 percent.
Plant products rose particularly sharply in April at 45.7 percent, animal products at 35.8 percent somewhat less sharply.
The increase in plant-based products is due, among other things, to the skyrocketing prices for grain: In April, they were 77.6 percent higher than in the same month last year and thus slightly higher than in March, when they were 70.2 percent: »The decisive factor for the enormous Grain price increase is still supply shortage as a result of the war in Ukraine,” the statisticians said.
Before the Russian invasion on February 24, Ukraine and Russia together accounted for nearly a third of world wheat exports.
Because exports via Ukraine's Black Sea ports have come to a virtual standstill, food prices have risen sharply worldwide.
Aid organizations warn of hunger crises in poor countries.
Left warns of "struggle for survival"
Politicians in Germany are concerned with the question of how inflation is affecting the social fabric in this country.
The Left Party sees millions of employees in the low-wage sector "in a financial struggle for survival" in view of the high inflation.
Parliamentary faction leader Dietmar Bartsch complained about an "inflation tsunami" in the "Neue Osnabrücker Zeitung".
"Obviously the traffic light parties didn't understand the drama," he continued.
Every fourth employee in Germany earns less than 2500 euros gross full-time.
In the east it is over 40 percent.
According to the Federal Ministry of Labor, as of the end of 2020, a total of 5.249 million full-time employees subject to social security contributions in Germany received a salary of up to 2,500 euros.
This corresponded to 24.5 percent of all full-time employees.
There were big differences from state to state.
The proportion in Hamburg was only 18 percent, in Schleswig-Holstein it was 27.8 percent and in Lower Saxony 26.3 percent.
In East Germany, outside of Berlin, the values were more than 40 percent.
The value was highest in Mecklenburg-Western Pomerania at 43.5 percent.
The Ministry of Labor pointed out “that the corona pandemic had a major impact on the German labor market in 2020”.
In response to Bartsch's request, the pay statistics are influenced both by the heavy use of short-time work and by other effects such as corona allowances and the waiver of salary increases.
Bartsch warned that millions of citizens had no buffer to compensate for additional costs "and some outrageous rip-offs such as fuel costs".
The 300 euros taxable energy cost allowance for employees is correct, but only a drop in the ocean.
"We need a large relief package III in the near future," demanded the left-wing parliamentary group leader.
"VAT on staple foods should be set to zero, at least temporarily." The corporations should be obliged to pass on the tax cut.
Bartsch also pushed for wage agreements that “at least compensate for inflation”.
mmq/Reuters/dpa/AFP