Inflation in Germany has indeed reached 7.3% in March, a level not seen for more than 40 years, according to final figures published on Tuesday, the war in Ukraine causing the prices of energy and foodstuffs to soar.
The figure, announced by the national statistics institute Destatis in a preliminary manner at the end of March, is a record since the reunification of the country in 1990. To find such a high increase in annual rate, we must go back to November 1981, in Germany from the ‘West. Over one month, the price increase is 2.5%, specifies Destatis, also confirming its first estimate. The harmonized price index, which serves as a reference at the European level, meanwhile reached 7.6%, pulverizing the ECB’s medium-term objective of 2%, under pressure to act.
From “supply shortages and a sharp rise in prices” raw materials and components due to the war in Ukraine are causing prices to soar, explains the institute. The conflict added to the imbalance between supply and demand that followed the peak of the health crisis, with the supply of raw materials, components and energy struggling to keep pace with the recovery.
“In addition to the Covid-19 pandemic, Russia’s war once morest Ukraine is having a big impact on rising prices in Germany, especially for fuel oil, fuels and natural gas, as well as certain foods”notes Georg Thiel, president of Destatis, in a press release.
6.2% rise in food prices
Energy prices jumped 39.5% in March in Germany, following increases of 22.5% in February and 20.5% in January. The cost of foodstuffs rose by 6.2% in March (+5.3% in February, +5.0% in January), with particularly high increases for sunflower and rapeseed oils (+30%) and fresh vegetables (+14.8%). Excluding energy, inflation is 3.6%, specifies Destatis.
All European countries, as well as the United States, are concerned, putting pressure on the European Central Bank, which meets on Thursday. The ECB is so far the most wait-and-see of the major central banks. Within the Board of Governors, discussions should therefore be stormy between the “hawks”, in favor of rapid monetary tightening to try to curb the surge in prices, and the “doves”, who fear that a withdrawal of support weighs down staggering growth.
