Monday 29 November 2021
Energy costs and special factors
Inflation tops the five percent mark
Now it has happened: the rate of price increases to more than five percent. Once again, among other things, the high cost of energy is responsible for the surcharge. ECB director Schnabel now sees the climax and expects rates to fall again.
The rise in prices for mostly daily necessities accelerated again in November. The consumer prices rose by an estimated 5.2 percent compared to the previous year and thus for the first time since 1992 again above the five percent mark, as the Federal Statistical Office announced provisionally. The last time there was a higher value during the reunification boom in June 1992 was 5.8 percent.
Annual inflation was 4.5 percent in October and 4.1 percent in September. Economists had only predicted an increase to 5.0 percent. Compared to October, prices fell slightly by 0.2 percent.
Once again, the price driver was energy. To a certain extent, there is also the lower value added tax last year. This was reduced from 19 to 7 percent from July to the end of September in order to stimulate consumption in the Corona crisis and thus cushion the consequences of the pandemic for the economy.
ECB director Isabel Schnabel expects lower values again in the future. “We assume that the peak of inflation will be reached in November,” said the currency watchdog on ZDF. The rate of inflation is likely to gradually decline again towards two percent in 2022, the target of the European Central Bank (ECB). Special effects such as the VAT cut would then be excluded from the statistics. “Energy prices will not continue to rise at the same pace,” she said. The pandemic-related supply bottlenecks in the economy should also gradually resolve.
The ECB will react decisively if inflation should persist at a level higher than two percent. “But at the moment it would be a mistake to raise interest rates early and thus slow the upswing, because that would essentially lead to increased unemployment and would not be able to change anything about the current very, very high inflation,” said Beak.