Germany’s inflation has skyrocketed following the Covid-19 pandemic and the huge amount of stimulus. According to the German consumer price index (CPI), inflation rose to 10.9% in September. This is the first time that Germany has experienced double-digit inflation since the end of World War II.
Inflation rates have increased dramatically across the globe. Many economists believe the reason is the European energy crisis that is linked to the Ukraine-Russia conflict. Similar to the United States of America, Europe and the United Kingdom both deployed large amounts of stimulus packages to help the economy recover from the Covid-19 pandemic. Germany passed a large number of stimulus packages to counter the economic decline caused by government-enforced lockdowns and business shutdowns.
Germany’s inflation hits double digits
Germany’s CPI data showed that the country’s September inflation rate rose to 10.9% annually in September. Germany’s inflation rate is now 8.8% higher than it was the month before. This is the highest level of inflation Germany has seen since 1951 or around the time the Second World War ended. When the European Union (EU), introduced the euro in 1999, Germany’s inflation was very close to two-digits. According to statistics, Germany’s energy prices rose by 44% in September over the same period last year.
“The high food and energy prices are causing substantial losses in purchasing power,” Torsten Schmid, head of economic research at Leibniz Institute for Economic Research , told The New York Times.
Germany Leads the Pack when It Comes to Covid-19 Stimulus packages and Subsidies. To Combat Rising Prices Parliament Adds a Package for $195 billion
Germany led the way in introducing stimulus programs, despite the financial disaster caused the Ukraine-Russia war. Between February 2020 and May 2020, Germany implemented an $844 billion recovery package that included $175 billion in stimulus funds and $675 million for lending. Wage subsidy programs were also implemented by the German government. They provided a minimum of 60% of employees’ wages.
Germany also implemented a three-month payment freeze on German-based consumer loans. At the end of June, the German parliament approved another $146 billion stimulus package. The $56 billion rebate package was also created by Parliament for electric car buyers in Germany. German economists believe that Germany’s high-inflation rate is due to a combination of Covid-19, stimulus and war in Europe. However, German bureaucrats plan to eliminate another package subsidy.
German inflation rose to 10.9% at the same time and members of Germany’s Parliament presented another package worth $195 billion. The latest German subsidy package also established price limits for natural gas. Officials from Germany stated that the government is trying to “cushion rising energy prices and the most severe consequences of those consequences for consumers or businesses,” on Thursday. “Prices must fall,” Olaf Scholz, chancellor, told reporters at a press conference. The chancellor said that to make prices fall, he was deploying a broad defense shield.