With the elimination of the 9-euro ticket and the fuel discount, the rate of inflation is picking up as expected. For the year as a whole, the cost of goods and services is rising at a rate not seen since the early 1950s.
Inflation in Germany rose sharply in September and has climbed to its highest level since the early 1950s. After the 9-euro ticket and the tank discount were abolished, goods and services cost an average of 10 percent more than a year earlier, as reported by the Federal Statistical Office. Economists had only expected an increase to 9.4 percent, after 7.9 percent in August. Compared to August, consumer prices in September rose by a total of 1.9 percent.
Inflation has thus risen to its highest level since December 1951, when annual inflation – based on largely comparable data – was 10.5 percent. The Ukraine war has driven up prices, especially for energy, but also for raw materials and food. Economists also expect double-digit inflation rates in the coming months.
Higher inflation rates reduce the purchasing power of consumers, who can afford less for one euro. People’s financial leeway is shrinking. According to a survey by the German Retail Association (HDE), 60 percent of consumers are already restricting themselves when shopping. For the coming months, 76 percent of those surveyed are preparing to shop more sparingly.
“Many households are currently being forced to spend significantly more money on energy or set aside for significantly higher heating bills. Accordingly, they have to save on other expenses, such as new purchases,” explained Rolf Bürkl, an expert at the Nuremberg-based consumer researcher GfK recently. This has consequences for Europe’s largest economy, because private consumption is an important pillar of the economy.
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. In September, energy cost 43.9 percent more than a year earlier, and food prices rose by 18.7 percent.
The fuel discount introduced by the federal government and the 9-euro ticket for local public transport had provided some relief in the past few months. Both measures expired at the end of August. The federal government is planning further relief. For example, pensioners, students and trainees are to receive a one-off energy price lump sum. The child benefit is to be increased at the beginning of the year. The federal government wants to dampen the rising gas prices with a gas price brake.
