Weekly shopping is becoming more and more expensive for private households.
(Photo: dpa)
Frankfurt The inflation expectations of private households in Germany have risen further. Expected inflation for the next 12 months rose to 7.5 percent in June from 7.0 percent in the previous month, according to new data from the Bundesbank. This is the highest value since the survey began in 2019. A year ago, the corresponding value was significantly lower at just over three percent. Average inflation expected over the next five years rose from 5.3 to 5.4 percent in June.
84 percent of those surveyed expect inflation rates to continue to rise over the next twelve months, while only five percent expect inflation to fall. The firm anchoring of inflation expectations is considered an important goal of monetary policy, which works primarily by controlling expectations. If expectations become unanchored, there is a risk of high wage demands, which in turn can prompt companies to raise prices. Economists speak of a wage-price spiral.
The European Central Bank (ECB) is aiming for inflation of two percent in the euro area in the medium term. In fact, inflation in June was 8.6 percent – a record since the introduction of the euro. The decisive factors are above all high price increases for energy and raw materials as well as for many preliminary products. The ECB has announced rate hikes to curb inflation. However, many other central banks have already acted and raised their key interest rates several times and significantly.
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