Inflation is scratching the 8 percent mark again

Created: 08/30/2022Updated: 08/30/2022 2:24 p.m

Consumer prices in Germany rose in August.

© Frank Rumpenhorst/dpa

Consumer prices in Germany are again increasing significantly.

Economists even think double-digit inflation rates are possible in the coming months.

Wiesbaden - Inflation in Germany is once again approaching the 8 percent mark.

After two months of declining values, the inflation rate picked up again in August.

Consumer prices were 7.9 percent above the level of the same month last year, as the Federal Statistical Office announced on Tuesday based on preliminary data.

Rising energy and food prices in particular were responsible for the upward leap.

From July to August, consumer prices increased by 0.3 percent.

Energy and food are price drivers

Inflation rates at the current level have never existed in reunified Germany.

In the old federal states you have to go back in the time series to the winter of 1973/1974 during the oil crisis to find similarly high values.

Energy and food have been the biggest price drivers for months.

The Russian attack on Ukraine and supply bottlenecks have exacerbated the already tense situation.

Inflation in Germany had already jumped to 7.9 percent in May.

After that, inflation slowed down somewhat.

The inflation rate was 7.6 percent in June and 7.5 percent in July.

Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro.

According to surveys, many households are already reducing their consumption because of the prices.

The federal government gave people some relief with their three-month tank discount and the 9-euro ticket for local public transport.

After these two measures expire at the end of August, the inflation rate should rise significantly, according to economists.

The Bundesbank considers it possible that the rate of inflation, as measured by the so-called harmonized index of consumer prices (HICP), will reach a magnitude of 10 percent in autumn.

"The increase in the general statutory minimum wage and the devaluation of the euro will provide additional impetus in the coming months," predicted the Bundesbank in its most recent monthly report.

"In addition, a surcharge on the gas tariffs is to be introduced in October and at the same time the VAT rate on gas is to be reduced."

In August, the HICP, which the European Central Bank uses for its monetary policy, was 8.8 percent for Germany according to provisional calculations.

The ECB is aiming for a stable price level with an annual inflation rate of 2 percent for the common currency area.

dpa