2023-05-21 13:10:34
A recent economic report showed that living conditions in Germany, as well as Austria and some eurozone countries, are declining continuously, and issues such as poverty and poor salaries are on the agenda of politicians.
The report indicated that on May 14, the results of a survey in Germany revealed that regarding a third of employees in the country said that the significantly high prices exhausted the limits of their financial capacity.
The results showed that 21% of those surveyed said that their salaries are “somewhat insufficient” to cover current living expenses, while 8.5% said that their salaries are “not sufficient at all” to cover these expenses.
The high inflation in Germany for months has been a burden for consumers in the country, as it devours purchasing power, although the pace of inflation fell last April for the second month in a row.
However, the inflation rate continues at a high level of 7.2%, despite the declining pace in the past two months. Indeed, the inflation rate in food prices last month reached 17.2% compared to the same month of 2022, while the annual inflation rate in energy prices reached 6.8%.
The German government, in turn, is working to break the high prices of natural gas, electricity and remote heating and provide them at affordable prices, by applying a program to curb the prices of these materials retroactively.
“The inflation rate fell for the second month in a row, but it is still at a high level,” said Ruth Brand, head of Germany’s Federal Statistical Office.
On the reason for this high level, she said, “Food is still the strongest driver of prices in the shopping basket in April.”
Last April, as in previous months, price increases were recorded for all food groups, especially for dairy products, which rose by 34%, bread by 21.3%, fish by 19%, and sugar and honey by 19.6%.
In Europe, the European Central Bank has been trying to curb high inflation through a series of interest rate hikes since July 2022, as high interest rates raise the cost of loans, which can reduce demand and confront high inflation rates.
The European Central Bank seeks to achieve price stability in the euro area in the medium term by keeping the inflation rate at 2%.
In neighboring Austria, the situation was no better. Last week, the Austrian government allocated an aid package of 500 million euros (541 million US dollars) to mitigate the effects of inflation on needy and disadvantaged families.
The Austrian government said that families with children, in particular, will benefit from this assistance, which is represented in unemployment and social benefits and assistance, as each family will receive an additional 60 euros for each child per month until the end of 2023, and this amount will also be provided For single-parent families whose monthly income is less than 2000 euros per month.
Family Minister Susan Raab and Social Affairs Minister Johannes Rausch said that single-parent families are the hardest hit by inflation.
“We want to start from where children need aid in Austria,” she explained, noting that the aim is to support affected families in a specific way that targets those in need, adding that regarding 400,000 children will benefit from these measures.
According to the statistics of the European Statistical Office “Eurostat”, of the European Union, prices increased on an annual basis in Austria by 9.7% last April.
In the eurozone, the European Statistical Agency “Eurostat” announced a few days ago that the rate of inflation in the eurozone rose during the past month, according to expectations, due to the rise in food and energy prices.
The unified consumer price index for the European Union in the eurozone recorded an annual increase of 7% in April, compared to 6.9% in March, which was in line with preliminary estimates issued on May 2.
On the other hand, the basic price index, which excludes the most volatile energy and food prices, increased by 5.6% compared to 5.7% in March, which was also in line with preliminary estimates.
This comes at a time when the European Central Bank raised its key interest rates earlier this month by a quarter of a basis point, while members of the Bank’s Governing Council believe that inflation expectations remain “too high for too long”.
Earlier this week, Joachim Nagel, a member of the European Central Bank’s Governing Council, said that the bank needs the help of governments and companies to overcome the crisis of high inflation in the euro area.
He continued, “While monetary policy needs to confront rising prices by increasing interest rates, officials must acknowledge the limitations of their influence and demand patience because monetary policy measures need some time to affect the economy.”
He added that the competition protection and anti-monopoly authorities should also limit companies’ ability to control prices in the market to ensure that they are not exaggerated.
In Austria, expert Gabriel Felbermayr also believes that European governments should intervene in the markets in order to control prices and thus curb the rate of inflation.
In press statements, he says that in Austria, which has an inflation rate higher than the European average, the government must intervene to suspend house rent increases, put a ceiling on energy prices, and reduce or stop the value-added tax on foodstuffs, to control the price tag.
This required intervention in the market has become the cause of a political crisis in Austria in recent days, as the Social Democratic Party, the leader of the opposition, stipulated that the government intervene in the market to control prices, to participate positively in government legislation that needs a two-thirds majority to be passed, which threatens the country with legislative paralysis.
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