Inflation in the world’s fourth-largest economy soared to 3.1 percent in July compared to the same time last year. The surge in inflation took it to its highest level in over a decade and the highest since the financial crash of 2008.
This was the first time since August 2008 that the annual inflation rate in Germany increased to above 3 percent.
Inflation in Germany is rising faster than in most other European countries. This is due in part to one-off effects, such as its reversal of last year’s temporary cut in value-added tax, a new carbon tax, and a reweighting of the basket of products used to calculate price changes.
However, Jens Weidmann, the German central bank chief has said he is concerned about the prospect of the European Central Bank (ECB)’s low-interest-rate environment being extended for too long. Weidmann stated that his advisers expect inflation in Germany to edge towards 5 percent by the end of this year.
Germany is also suffering from the impact of the global shortage of raw materials. Prices of manufactured goods are rising as German factories struggle with spiraling costs and shortages of materials, such as semiconductors, metals, plastics, and timber. The pandemic has also created bottlenecks in container shipping routes, adding to manufacturing woes, reported by DAILY INVEST NEWS.