Inflation: Life in Germany is getting more and more expensive - the strongest rise since 1992

Created: 01/19/2022, 08:47

Supermarket: In Germany, inflation is picking up significantly.

In addition to the prices for heating oil and fuel, consumers also have to dig deeper into their pockets for groceries.

© Federico Gambarini/dpa

Prices in Germany rose more sharply in December than they have in 20 years.

Food, in particular, went up unexpectedly sharply.

There is no end in sight.

Wiesbaden - Inflation in Germany accelerated again towards the end of 2021, also due to higher food prices.

The prices for goods and services climbed in December by an average of 5.3 percent compared to the same month last year and thus more strongly than at any time since 1992, as the Federal Statistical Office confirmed on Wednesday.

In November, the inflation rate was still 5.2 percent.

Inflation: Companies prepare for further price increases

Most experts assume that the inflation peak has been reached. However, both consumers and companies have to be prepared for sustained price increases: the barometer for price expectations fell only slightly to 44.6 points in December and thus remained only 0.3 points below the historic high reached in November, according to the Munich Ifo Institute announced on his survey on Wednesday. Companies were asked about their plans for price increases in the next three months. "This will have an impact on consumer prices," said Ifo economics chief Timo Wollmershäuser. "Inflation will only come down slowly over the course of this year."

The Ifo Institute* expects the inflation rate to be over four percent in the coming months and only gradually approach the two percent mark towards the end of 2022.

An inflation rate of around three and a half percent is now expected for the year as a whole, after 3.1 percent in the past year.

Inflation: Prices for heating oil and fuel are rising sharply

Energy prices rose by 18.3 percent in December. "The CO2 pricing and the raw material price development also had an effect here," it said. Light heating oil rose particularly sharply at 61.0 percent, as did motor fuels at 33.8 percent. Food costs an average of 6.0 percent more. “Vegetables in particular became more expensive,” emphasized the statisticians. For this, 9.9 percent more was required than in December 2020. The plus for clothing and shoes was 5.5 percent, while net cold rents increased by 1.5 percent.

Most experts expect a decline for January - also because of a statistical effect.

Because the prices will then no longer be compared with those from the second half of 2020, when VAT was temporarily reduced from 19 to 16 percent due to the Corona crisis.

Some experts see the danger that inflation will also become a persistent problem in Europe.

That would put pressure on the European Central Bank (ECB), which considers an inflation rate of two percent to be ideal for the economy in the monetary union.

However, your President Christine Lagarde has so far ruled out rate hikes for this year.