Gas price rises sharply again: inflation soon at ten percent?

Created: 08/22/2022, 17:28

By: Moritz Serif

Pipe systems and shut-off devices in the gas receiving station of the Nord Stream 1 Baltic Sea pipeline in Lubmin.

© Jens Büttner/dpa

Russia cut off gas supplies again.

This has an immediate effect on the prices for the raw material.

The economy demands relief.

Berlin - In Europe, the price of gas has risen sharply again.

The raw material now costs 292.50 euros per megawatt hour.

This corresponds to an increase of 18 percent.

Earlier, Russia cut off gas supplies to Europe through the Nord Stream 1 pipeline.

Due to the unfavorable developments on the gas market, the Bundesbank considers it likely that economic output in Germany will fall in the winter months.

"The high degree of uncertainty about the gas supply in the coming winter and the strong price increases are likely to put a significant strain on private households and companies," said the latest monthly report.

The central bank is now assuming that the inflation rate in Germany could reach “an order of magnitude of ten percent” in the fall.

Gas price rises: the economy demands relief

Because of the high prices, the economy is demanding relief.

DIHK President Peter Adrian said the planned reduction in VAT on gas was “usually ineffective for companies because it is a transitory item in their books.

Instead, a permanent reduction in the energy tax on the gas consumption of companies to the European minimum level would be a simple and fast-acting relief.”

In view of the dramatic price increases of recent months, this would not affect the important price signal for efficient gas consumption.

"In view of the sharp rise in gas prices, energy-intensive companies in particular have already exhausted their savings potential," says Adrian.

The gas surcharge also applies to consumers.

Gas price rises: levy is additional

Citizens in Germany do not expect the reduction to have any negative impact on efforts to use less gas.

In a representative survey by the opinion research institute YouGov, 63 percent of those questioned stated that they did not believe that the tax cut would reduce the incentive to save on gas.

On the other hand, 24 percent expect such an effect.

This gas surcharge will be introduced in October and will initially be 2.4 cents per kilowatt hour.

It is intended to compensate for the increased procurement costs of large importers for missing deliveries from Russia in order to protect the company from bankruptcy.

With two additional allocations for network control (balancing energy) and gas storage, a total of 3.26 cents per kilowatt hour is to be paid, including 7 percent VAT.

(mse/dpa)