The rapid rise in energy prices has accelerated inflation in Germany again

Annual inflation in Europe’s largest economy reached 5.1% in February

The continuing rise in energy prices has led to another acceleration of German inflation. In February, the rise in prices in the country remained at high levels, according to data from the Federal Statistical Office (Destatis), published on Friday.

Annual inflation reached 5.1% in February, up from 4.9% a month earlier. The monthly increase in prices amounted to 0.9 percent.

The increase is due to the effects of the crisis, in particular the continuing problems with supply chains and the significant rise in prices in the ascending stages of the economic process, especially those in the energy sector.

“The effects of the coronavirus pandemic are growing because of the uncertainty surrounding Russia’s attack on Ukraine,” said Destatis chief Georg Thiel. “The current rise in prices, especially of mineral oil products, is not yet reflected in the February results,” he added.

The price of goods in Germany increased by 7.9% on an annual basis, with a significant increase in the price of energy products of 22.5%. Motor fuels have risen by 25.8%, while the price of energy for households has risen by 20.8%.

Significant growth was also reported in the price of heating oil (52.6%), natural gas (35.7%), and electricity (13.0%).

Services rose by 2.8% on an annual basis, leaving rising prices below the overall level of inflation. There was a decrease in the price in the field of telecommunications (-0.1% decrease) and social services (-2.4% decrease). Indicators are telling us that we are closer to a deeper economic crisis.

Data from the Wiesbaden-based institute also show that inflation, outside of energy prices, was 3.3%. Excluding the rise in food prices, the figure is 3.0%.

In early March, the German central bank (Bundesbank) warned that inflation in Germany could reach an average of 5% this year, as Russia’s war with Ukraine will further increase energy prices.

“The eurozone is also expected to record a record high level of inflation,” said bank governor Joachim Nagel. “We must keep our eyes on the normalization of monetary policy,” he appealed.

By Petar Lavov

inflation
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