The highest value in nearly 50 years
Inflation of energy and food fuels
Now it’s official: the Federal Statistical Office has set the inflation rate in Germany at 7.9 percent for May. The fact that the figure is higher than it has been for decades is mainly due to the energy and food sectors. The bottlenecks of war and deliveries are accelerating the trend.
In May, the inflation rate in Germany hit a new high for the third consecutive month since reunification. According to the Federal Statistical Office, consumer prices increased by 7.9 percent compared to the same month last year, thus confirming the preliminary data from the end of May. “The last time such a high rate of inflation occurred in the former federal territory was in the winter of 1973/74,” said the president of the Federal Office, Georg Thiel.
At that time, following the first oil crisis, mineral oil prices had risen sharply. Currently, energy price increases are the main reason for high inflation. “But we are also seeing price increases for many other goods, especially food,” Thiel explained. In March 2022, the inflation rate was already 7.3% and then 7.4% in April.
Since the start of the war in Ukraine, the previously observed rise in energy prices has “increased significantly” and is having a “significant” effect on the rate of inflation, the statistical office stressed. Additionally, there are delivery bottlenecks due to disruption of supply chains – including due to the corona pandemic – as well as “significant price increases at upstream economic levels.”
Energy prices rose 38.3 percent in a year in May. The prices of light heating oil almost doubled (up 94.8 per cent); Natural gas has become 55.2% more expensive and fuel has become 41% more expensive. Electricity increased by 21.5 percent.
Significant increase in food prices
Consumers also had to dig much deeper into their pockets for groceries in May than they did a year earlier: food prices rose 11.1% compared to May 2021. The Federal Office explained that the upward pressure on prices “has again intensified significantly” after an 8.6 percent increase in April.
Edible fats and oils have become significantly more expensive (up 38.7%). The statisticians also looked at double-digit inflation rates for meat and meat products (up 16.5%), dairy products and eggs (up 13.1%), and bread and grain products (plus 13.1%). 10.8%). Without the energy and food sectors, the inflation rate in May would have been 3.8 percent, according to the Federal Office.
The European Central Bank (ECB) considers a level of 2% ideal for the euro area. Due to rising prices, the ECB, led by President Christine Lagarde, wants to raise interest rates in July for the first time in eleven years.