German Inflation hits a New 50-Year High as the ECB Raises Possibility of Larger Interest Rate Hikes
According to some analysts, before the end of 2022, German inflation can reach double digits...
During the month of August, German inflation hit a 50-year high. The numbers indicate a growing case for the European Central Bank to push for larger interest rate hikes within the next few months. Among other EU countries, German consumer prices increased the same amount of 8.8% annually. In July, the figure increased by 8.5%, unexpectedly.
Even as Germany’s country government and the European Union as a whole continue to work in order to stifle inflation, numbers continue to rise. Across the entire EU, public transit tickets have been made cheaper and fuel taxes have been cut. However, these attempts to aid inflation end tomorrow. According to some analysts, before the end of 2022, German inflation can reach double digits. Thomas Gitzel, the VP Bank Chief Economist, said, "Judging by the current inflation rate and what is still to come, the ECB should actually launch a jumbo interest rate step.”
The European Central Bank raised the rates by 50bps to zero in July. A similar move was expected to take place in September. However, most of the members of the Central Bank have made a fair case for formulating a 75bps increase. Euro-zone inflation is four times the 2% at 8.9%. Worries are that inflation can reach, or even exceed, 10% in the upcoming months.
In May, German inflation hit 8.7%. This marked the first time since the 1970s of inflation was that high. Energy prices have been one of inflation’s driving causes due to the war in Ukraine. This month, energy prices are 35.6% higher compared to last year.