The EU’s leading economy has the highest inflation in 5 decades

The record inflation rate in Germany was announced by the German statistics office Destatis on May 30.

High inflation in Germany comes amid conflict in Ukraine and unprecedented sanctions on Russia. Rising energy prices have had a significant impact on inflation in Germany since late February.

In addition, another factor contributing to such high inflation in Germany is the disruption in the supply chain caused by the COVID-19 pandemic, according to Destatis.

Energy prices in Germany rose 38.3% in May year-on-year, while food prices rose 11.1%.

Consumer prices in Germany in May rose 0.9% by national standards and 1.1% by EU standards. Destatis is expected to announce the final results for May on June 14, RT reported.

This puts more pressure on the European Central Bank (ECB) to start tightening monetary policy. Last week, ECB President Christine Lagarde signaled that negative interest rates in the euro area would end within months, according to the Guardian.

Bloomberg said that, in addition to the inflation of Virtue At an all-time high, Spain also reported an unexpected acceleration of inflation to a record 8.5%, far exceeding economists’ estimates, despite government support including government aid. fuel supply and minimum wage increase.

The German inflation report comes just 10 days before the key ECB meeting, where officials will announce the end of large-scale asset purchases and confirm plans to raise interest rates in July – a first. for over a decade. Some policymakers have even floated the idea of ​​a half point increase, instead of a quarter point as most policymakers advocate.

Inflation data increases pressure on governments as households tighten their spending. Earlier this week, German Finance Minister Christian Lindner called the fight against rising prices a “top priority”. “Inflation is a huge economic risk,” he stressed.

In Germany, the House of Commons has passed a package of support measures including one-time cash payments, reducing electricity bills…

Prime Minister Olaf Scholz has signaled that more action may be taken if needed to protect households and businesses.

ZEW economist Friedrich Heinemann points out, when inflationary Now that it’s nearing its peak, the extent of the impact on households isn’t over yet. “Consumers will have to factor in further price increases because many input materials are still scarce and wholesale prices are still skyrocketing,” he said.