Last Updated on September 30, 2022
Inflation has reached double digits in Germany for the first time in decades after temporary government-relief measures ended and Europe’s energy crisis worsened. Consumer prices jumped 10.9% from a year ago in September, surging past August’s 8.8% advance, the Federal Statistics Office said Thursday. Germany’s latest inflation number was higher than expected, as most economic analysts expected the number to remain be between 10 and 10.2 percent.
A spike in inflation was expected as Germany phased out summer discounts on public transportation and fuel. The higher-than-anticipated figure will trouble the European Central Bank, however, which is struggling to reign in surging prices. Cost of living price hikes are expected to set new records when new data becomes available on Friday.
Energy costs continue to be one of the main factors behind Germany and the continent’s inflation woes. Energy costs in Germany are 43.9 percent higher when compared with September 2021, Reuters reported.
The German government on Thursday announced it would cap gas prices in an effort to lower inflation. Chancellor Olaf Scholz’s administration will borrow at least €150 billion ($146 billion) for the initiative.
European Central Bank officials are expected to announce another hefty interest rate hike following a historic 75 basis-point increase earlier this month. Similar hikes have been announced by the U.S. Federal Reserve.
“Analysts increasingly predict a euro-zone recession as the cost-of-living crisis bites, with data Thursday showing confidence plunging to levels last seen during the pandemic,” wrote Jana Randrow of Bloomberg Economics.
In Germany, Europe’s largest economy, analysts have predicted a 0.4% decline in economic output next year. Prior to Thursday’s gas-price-cap announcement, the German government had sought to offset the impact on consumers and businesses with aid packages totaling nearly €100 billion.
German consumers have altered their shopping behaviors due to skyrocketing inflation., according to a survey issued by the HDE trade association on Thursday. 46 percent of respondents they had stopped buying certain products.