Groceries in particular became more expensive last year.
Photo: dpa / Annette Riedl
The Christmas dinner this time was probably particularly expensive in many rooms. And not necessarily because they did a lot, but because food prices rose sharply in December – by six percent, as the Federal Statistical Office announced on Thursday. Inflation thus increased further towards the end of the year. While it was 5.2 percent in November compared to the same month last year, it was 5.3 percent in December.
According to preliminary estimates, the inflation rate averaged 3.1 percent last year. This is the highest value since 1993 and was already expected at this level by economists. The cost of energy rose even faster than food prices. Their rate of price increase in December was 18.3 percent compared to the same month last year.
“Inflation is driving the division of society forward,” warned the deputy chairman of the Left parliamentary group in the Bundestag, Gesine Lötzsch, in view of these figures. These are a problem especially for poor people. “It is time for the Chancellor and the Minister of Finance not to think regarding relieving the burden on companies, but instead to help the people who need it most.”
In addition to the supply bottlenecks due to the recovering global economy, the introduction of the CO2 tax also boosted the inflation rate. Another factor was the renewed increase in the VAT rate. As an economic measure from July to December 2020, the then black-and-red federal government reduced this for six months from 19 percent to 16 percent or from seven to five percent. As a result, the inflation rate in 2020 – not least because of the economic downturn – was extremely low at 0.5 percent.
This year, too, the inflation rate is likely to be well above the ECB’s target of around two percent. The Institute for Macroeconomics and Business Cycle Research is assuming an inflation rate of 2.6 percent. The Munich Ifo Institute even predicts 3.3 percent.
The high rate of inflation and the subdued collective bargaining agreements meant that the working population had to accept a loss of purchasing power last year. The collective wage settlements in 2021 were an average of 1.7 percent, well below the price increase rate that has now been determined.
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