German economy rocked by highest inflation rate in 18 years as prices soar | World | News

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Annual inflation over the course of 2021 rose by more than 3%, reaching its highest level since 1992. Germany’s Federal Statistical Office said that after another rise in consumer prices in December , inflation averaged 3.1% over the year.

In 1993, the inflation rate jumped to 4.5%, while in 2020, annual inflation hovered at 0.5%.

It comes as Germany’s economy shrank by 1% in the last three months of the year, with the European country’s production reduced during coronavirus-related shortages and supply chain disruptions.

The Federal Statistical Office said the economy grew by 2.7% in 2020, but the last quarter fell from earlier parts of the year.

Although there has been an improvement over last year, Europe’s largest economy still lags behind other key economies, such as the UK, France and the United States. United, for post-pandemic GDP.

Georg Thiel, president of German statistics agency Destatis, said: “Despite the current pandemic situation and increasing supply and material bottlenecks, the German economy has been able to recover from the crisis. of the previous year, although economic output has not yet reached the pre-crisis level.

Newly installed German Chancellor Olaf Scholz has been criticized for “exacerbating the problem of inflation” and “ignoring the needs of citizens”.

German economist Dorothea Siems argued that the new “traffic light coalition” led by Mr Scholz had helped push up inflation rates.

She attributed “additional pressure on prices” to Mr Scholz’s “bold monetary policy”, adding that he is “doing everything to make the problem worse”.

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He told members of the Liberal Democratic Party: “I promise that with the means at my disposal, we will give such solidarity support to those who are particularly affected.”

A number of European governments have been considering how best to protect consumers and divest from suppliers as wholesale gas prices soar.

The UK is considering getting into the electricity market, with the UK government looking to foot the bill for rising prices, rather than consumers, it was learned on Wednesday morning.

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