Germany’s inflation rate soars to a 13-year high of 3.4%
German economic dynamics
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Driven by a rebound in economic activity, rising energy prices and disruptions in the global supply chain, Germany’s inflation rate has risen to its highest level since 2008.
The unified consumer price index in Germany rose to 3.4% in August from the same period last year, up from 3.1% in July. This growth may exacerbate concerns that the Eurozone’s ultra-loose monetary policy may cause its largest economy to overheat.
The European Central Bank Management Committee will meet next week to discuss whether the Eurozone economy Rebound The impact of the coronavirus pandemic is sufficient to justify the slowdown in its bond purchases.
François Villeroy de Galhau, governor of the Bank of France and member of the Council of the European Central Bank, said in a radio interview on Monday that the decision “should consider” the improvement of summer financing conditions.
The European Central Bank expects the increase in inflation this year to be “temporary” and expects price growth to weaken next year. When the data was released on Tuesday, the euro zone inflation rate was expected to rise from 2.2% in July to 2.8% in August.
“Today’s surge in inflation does not help bridge the gap between the two inflation camps; one believes that inflation drivers are temporary and the underlying effect will disappear or even reverse next year, and the other believes that there are widespread risks to inflation acceleration,” ING Macro Research Director Carsten Brzeski (Carsten Brzeski) said.
As the world economy rebounds from the effects of the pandemic, inflation rates in many countries are rising, which has increased the pressure on central banks to begin to reduce monetary stimulus measures introduced in the year.
Jay Powell, Chairman of the Federal Reserve Board, Said last week The central bank plans to start reducing the scale of asset purchases this year.
The last time Germany’s inflation rate reached 3.4% was before the 2008 financial crisis. It is now growing faster than most other European countries, partly due to one-time effects, such as reversing the temporary reduction of value-added tax last year.
However, there are few signs that price pressures are affecting wages. The Federal Bureau of Statistics said on Monday that in the three months to June, wages, including one-off payments, increased by 1.9% compared to the same period a year ago.
It added that last year’s value-added tax cuts and the drop in oil prices will be reflected in rising inflation for the rest of the year.
As German factories work hard to deal with it, the prices of finished products have been pushed up in particular Rising cost And the shortage of materials such as semiconductors, and the bottleneck of container transportation routes.
In Germany, the commodity inflation rate rose to 5.6% in August, while the service industry inflation rate reached 2.5%.
Producer prices of German industrial products rose by 10.4% in July, the highest increase since the oil crisis in 1975, when the headline inflation rate reached a post-war high of nearly 8%. Supply chain disruption caused import prices to rise by 15% in July, the fastest growth rate in 40 years.
“In the next few months, the bottleneck that may persist temporarily may cause the prices of some commodities to rise further, thereby driving inflation-depending on the development of energy prices-to 4.5% or even 5%,” said an economist at Commerzbank. Ralph Solvin said. “However, by 2022, the inflation rate should fall again.”
Earlier on Thursday, the Spanish Statistics Agency stated that due to rising electricity prices, its August inflation rate was 3.3%, the highest level since 2012 and higher than July’s 2.9%.