Inflation remains high, but is not expected to be as dramatic as feared in the coming year. This emerges from the economic forecast that Economics Minister Habeck intends to present tomorrow. The reason for this is government intervention in energy prices.
Due to the planned gas and electricity price brakes, the federal government expects inflation to fall in the coming year. According to the latest economic forecast, the inflation rate will fall to 7 percent next year, reports the “Handelsblatt”. For 2022 as a whole, the Federal Ministry of Economics is forecasting an inflation rate of 8 percent. Economics Minister Robert Habeck wants to present the federal government’s autumn projection on Wednesday.
According to the report, inflation expectations are therefore somewhat lower than expected a few days ago. The leading economic research institutes had forecast an inflation rate of 8.4 percent for 2022 and 8.8 percent for 2023 in their report at the end of September. In the meantime, however, the officials in the Ministry of Economics have incorporated the effect of the gas and electricity price brake, which is why the inflation forecast is lower.
According to the report, there is agreement between the economic institutes and the government when forecasting gross domestic product (GDP). Both expect GDP to grow by 1.4 percent in the current year. In the coming year, it is expected to decrease by 0.4 percent. Gas and electricity price brakes would mitigate the recession. However, due to the halt to Russian gas deliveries, energy prices remain at a very high level. According to the government, this is slowing down industrial production, especially in energy-intensive areas.
A commission of experts set up by the government presented a phased model on Monday. This provides for a one-time payment this year and a gas price brake for private households and small and medium-sized companies as well as for industrial consumers in the coming year.
