Consumer prices have been rising more and more recently.
(Photo: IMAGO/Martin Wagner)
Frankfurt, Berlin Inflation in Germany increased significantly in September. Consumer prices increased by 10 percent compared to the previous year to. This was announced by the Federal Statistical Office on Thursday based on a preliminary estimate. This is the highest since December 1951, when annual inflation — on broadly comparable data — was 10.5 percent.
In August, inflation was still 7.9 percent. Economists polled by the Reuters news agency had expected a figure of 9.4 percent for September. Reasons for the increase are the end of the tank discount and the nine-euro ticket. The two relief measures of the traffic light coalition expired at the end of August and had previously dampened inflation.
Commerzbank chief economist Jörg Krämer says: “Inflation in Germany is once again clearly visible.” It wasn’t that high even in the 1970s. “Prices are also rising faster and faster beyond energy. That is worrying.”
In its current monthly report, the Bundesbank assumes double-digit inflation rates in the coming months. The price surge is becoming an ever-growing problem, both politically and economically. At the beginning of the week, thousands of people demonstrated against high inflation in various cities in eastern Germany. Companies in energy-intensive sectors in particular fear for their existence.
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Commerzbank chief economist Krämer points out that high inflation reduces the purchasing power of consumers and forces them to save. In addition, many business activities would become unprofitable due to high energy prices.
Energy-intensive companies cut production
The energy-intensive companies have already reduced their production by seven percent since February. “All of this is a heavy burden for the economy, which is why I expect a recession for the winter half-year.”
Sebastian Olbert, Managing Director of management consultancy LEK Consulting, says: “There are clear differences in the extent to which companies can pass inflation-related cost increases on to customers.” on the development of certain price indices.
He cites the energy industry and the transport sector as examples, i.e. deliveries by truck or ship. On the other hand, sectors in which there are fixed prices, such as in the pharmaceutical and healthcare sectors, would have greater problems. “There, cost increases have to be offset by savings.”
There are also many industries that cannot further increase prices for other reasons. “This applies, for example, to the construction industry, where prices have already risen sharply due to more expensive raw materials,” says Olbert. From his point of view, small companies are particularly affected because they have less negotiating power and less leeway to set prices with customers and suppliers.
More: “Incredible price hammer”: Producer prices in Germany are rising at record speed