The annual inflation rate had already risen to 8.7 percent in January after the removal of one-off subsidies for gas and district heating customers. Energy and food prices have been fueling inflation for months.
According to the official on Wednesday, the cost of energy is 19.1 percent higher than a year ago, according to preliminary figures. Food prices increased by 21.8 percent in one year.
According to calculations made by the Federal Office, consumer prices are expected to increase by 0.8 percent in the January-February 2022 period. In January 2023, the reporting month, the Federal Office changed the calculation basis to the base year 2020.
Economists do not expect a full easing in prices this year, even if the peak of the increase has passed. According to economists, inflation has now expanded and affects many products other than energy and food.
Rising wages can also fuel inflation. Government price brakes for gas and electricity, which will be applied retrospectively from March 1, 2023 to January 1, 2023, are likely to have a softening effect in the current year.
The federal government projects an average inflation rate of 6.0 percent for 2023. According to the latest information, the Bundesbank expects inflation in Germany, measured by the harmonized consumer price index (HICP), which is decisive for monetary policy in the eurozone, to fall between 6 and 7 percent this year.
In the medium term, the European Central Bank (ECB) aims for price stability in the eurozone, where inflation is 2 percent. This goal has been far away for months. Although inflation slowed down again in January, consumer prices in the currency area of 20 countries currently increased by 8.6 percent compared to the same month last year.
The ECB is trying to curb persistent hyperinflation by raising interest rates. Higher interest rates make loans more expensive. This can slow demand and counter high inflation rates. After five consecutive increases since July, the key interest rate in the eurozone is now 3.0 percent. For the ECB meeting on March 16, monetary watchers announced another 0.5 percentage point hike.
Higher inflation rates reduce the purchasing power of consumers because then they can afford less for one euro. Sharp increases in energy prices, one of the main factors of inflation, are also a burden on companies.
(SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
