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Wiesbaden, Germany
Inflation in Germany breached the 5-per-cent mark in November for the first time in around 29 years.
Consumer prices rose by 5.2 per cent compared with the same month last year, the Federal Statistical Office announced in an initial estimate on Monday.
The inflation rate last month stood at 4.5 per cent.
According to preliminary data, consumer prices actually fell by 0.2 per cent in November compared with the previous month. However household energy costs rose by 22.1 per cent when measured year-on-year.
Inflation has been fuelled for months by rising energy prices as the global economy recovers from the 2020
In addition, the withdrawal of the temporary VAT cut is now having a full impact. The regular VAT rates have been in force again since January 2021, so goods and services are tending to become more expensive again.
Added to this are material shortages and supply bottlenecks, as well as the introduction of the CO2 tax at the beginning of 2021.
Economists expect the inflation rate to fall again at the beginning of next year, mainly because the special effect from the VAT cut will no longer apply.
The German Council of Economic Experts recently forecast a drop in the inflation rate to 2.6 per cent for 2022.
Inflation is an important indicator for the monetary policy of the European Central Bank (ECB). It is aiming for an annual inflation rate of 2 per cent for the eurozone currency area of 19 countries.
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