After the introduction of the fuel discount and 9-euro ticket, the inflation dynamic in Germany weakened somewhat for the second month in a row.
According to an initial estimate by the Federal Statistical Office, consumer prices rose by 7.5 percent in July compared to the same month last year. In June the annual inflation rate was 7.6 percent and in May it was 7.9 percent. Above all, price jumps in energy as a result of the Ukraine war and rising food prices are fueling inflation in Europe's largest economy.
In July, energy prices rose by 35.7 percent compared to the same month last year. Food cost 14.8 percent more than a year earlier, as the Wiesbaden authorities announced on Thursday. Higher inflation rates reduce the purchasing power of consumers because they can afford less for one euro. That's social explosives. According to studies, high inflation rates hit low-income households disproportionately hard.
The federal government is trying to relieve people, among other things, with the tank discount introduced at the beginning of June and the 9-euro ticket. In addition, since July 1, electricity customers no longer have to pay for the promotion of green electricity via their electricity bill. Further relief measures are currently being discussed.
Still higher prices than in June
According to preliminary data, consumer prices rose 0.9 percent month-on-month in July. According to economists, people cannot hope for a sustained decline in inflation for the time being, also because the 9-euro ticket and fuel discount are limited to the end of August.
"The inflation rate is likely to remain high in the coming months. It could even rise again in September because the temporary relief measures will then no longer apply," wrote the Deutsche Bundesbank in its recently published monthly report.
Inflation rates at the current level have never existed in reunified Germany. In the old federal states there were similarly high values in the winter of 1973/1974. At that time, oil prices rose sharply as a result of the first oil crisis.
