Economists Voice on High Inflation in Germany

Inflation in Germany reached eight percent. In May, inflation continued to rise from perhaps a record level: consumer prices were 7.9 percent higher than in the same month last year. 

This was announced by the Federal Statistical Office in Wiesbaden on Monday based on preliminary data. Inflation rates at this level previously did not exist in a reunited Germany. 

In the old states, you have to go back to the winter of 1973/1974 to find scores that are just as high. At that time, the price of mineral oil jumped sharply due to the first oil crisis.

After much hesitation, the first rate hike in the euro area in eleven years has now been targeted: The European Central Bank (ECB) has announced that it will end its current negative deposit rate of minus 0.5 percent with two rate hikes in July and September.  

Rising inflation can be combated with higher interest rates. Review of the voice of economists: Michael Holstein, chief economist at DZ Bank "High inflation rates are weighing heavily on consumer budgets in Germany. 

Households on relatively low incomes have been particularly hard hit by rising food and energy prices. Federal government relief measures will bring several aid in the coming months. However, the danger remains that a decline in real household incomes will also lead to a further economic downturn."

Michael Heise, chief economist at HQ Trust: "May was not a happy month for consumers. (...) 

Despite the higher prices of fuel and heating oil compared to April, commercial food and non-energy goods contributed significantly to the rise in rates prices. 

This is indicated by results from individual federal states. Companies continue to increase costs of energy, transportation and materials procurement. 

Strong increases in producer prices for commercial products are increasingly affecting retail trade and thus end consumers. No relief is seen for consumers in short term. 

The effects of the war in Ukraine on energy prices and supply bottlenecks caused by China's lockdown measures will continue to weigh on the price climate in the months to come." Jens-Oliver Niklasch, economist Landesbank Baden-Württemberg:

 "Prices are rising and there is no end. Looking upstream, the months ahead are likely to remain marked by high inflation. 

Apart from energy, food is also becoming increasingly expensive. coming with tax breaks for cheaper local fuel and transport is not a real improvement, but rather a textbook example of fiscal activism. Help will only come when high energy prices are over, but it doesn't look like it for now. 

We have to live with this level prices that have now been reached. This is a huge blow to low-income households, as they have to spend a disproportionate amount on energy and food.

" Friedrich Heinemann, head of the research department "Corporate Taxation and Public Finance" at ZEW Mannheim: "Consumers should expect prices to continue to rise as many primary products are still scarce and wholesale prices are still rising drastically. 

Very good labor market data also suggests a downward spiral. the feared wage-price could soon rise in Germany too. 

The inflation process will soon stabilize." Jörg Zeuner, Head of the Union of Investment Economists "We only expect a significant decline in inflation from late 2022 and from early 2024 the inflation rate will be closer to the European Central Bank's 2 to 2.5 percent lie target. 

Main reason: supply and demand need to be more aligned each other by then - in terms of quantity and composition. 

First, because overall demand should lose momentum. Second, because the biggest supply bottlenecks - particularly in the energy and food sectors - should already be behind us. And third, demand behavior will continue become normal. 

As a result, less goods are demanded, but more services are needed. At the same time, the range of offers is more in line with the worldCommerzbank

Even in the long term, there are several causes of high inflationary pressures. Also due to the pandemic, too much liquidity has been circulating in recent years, which will continue to drive inflation for some time. 

There's also a lot more. structural factors such as the declining proportion of the working population in many regions of the world, the costs of fighting climate change and faltering globalization."

Ralfcircul, economist at Landesbank Hessen-Thüringen: "Inflation is surprising again and continues in only one direction - up. Price increases are broad, with a particular focus on energy and food. 

But core inflation should not be ignored. good. Further improvements are expected here and This puts the European Central Bank under pressure to act, ECB Chief Economist Lane and ECB President Lagarde still trying to dampen interest rate expectations. 

Markets are increasingly pricing in a massive rate hike in July." Thomas Gitzel, chief economist at VP-Bank: "The ECB is aware of signs that times are too late. 

The ECB took the consequences of rising energy prices after the outbreak of war in Ukraine too lightly. Significant increases in energy prices eat into the broad price structure after a while.

Currency watchdogs underestimate this effect. At least now a commitment to take preventive action has been put forward. 

ECB boss Christine Lagarde has announced rate hikes for July and September in an unusual way." Carsten Brzeski, chief economist for Germany and Austria at ING: "In an interview published this morning, Philip Lane really decides on the ECB's communications strategy previously never committed. 

Instead, he outlined a roadmap for normalizing monetary policy, announcing a de facto halt to net asset purchases in early July, a 25 basis point rate hike at the July 21 ECB meeting, and another 25 basis point rate hike at the September meeting. meeting. 

There is nothing wrong with the content of his comments, which we have come to expect from the ECB. However, the de facto advance notice of nearly two months leading up to the July 21 meeting was extraordinary, to say the least. (...) 

If eurozone core inflation continues to pick up in May and June, Lane and Lagarde could still regret their new commitments up front." 

Instead, he outlined a roadmap for normalizing monetary policy, announcing a permanent halt to net asset purchases. facto in early July, a 25 basis point rate hike at the ECB's July 21 meeting, and another 25 basis point rate hike at the September meeting. 

There was nothing wrong with the content of his comments, which we had expected from the ECB. However, earlier notice the past two de facto months leading up to the July 21 meeting have been extraordinary, to say the least. (...)

If eurozone core inflation continues to pick up in May and June, Lane and Lagarde could still regret their new commitments up front." 

Instead, he outlined a roadmap for normalizing monetary policy, announcing a de facto halt to net asset purchases in early July, a 25 basis point rate hike at the July 21 ECB meeting, and another 25 basis point rate hike at the September meeting. meeting.

There is nothing wrong with the content of his comments, which we have come to expect from the ECB. However, the de facto advance notice of nearly two months leading up to the July 21 meeting was extraordinary, to say the least. (...)

If core euro zone inflation continues to rise in May and June, Lane and Lagarde could still regret their new commitments up front." A 25 basis point rate hike at the ECB's July 21 meeting and a 25 basis point rate hike more continued at the September meeting. 

There was nothing wrong with the content of his comments, which we had expected from the ECB. However, the de facto advance notice of nearly two months leading up to the July 21 meeting was extraordinary, to say the least. (...) 

If core inflation the eurozone continued to improve in May and June, Lane and Lagarde could still regret their new commitments up front." a 25 basis point rate hike at the July 21 meeting of the ECB and a further 25 basis point rate hike at the September meeting. 

There is nothing wrong with the content of his comments, which we have come to expect from the ECB. However, the de facto advance notice of nearly two months leading up to the July 21 meeting was extraordinary, to say the least. (...) 

If eurozone core inflation continues to rise in May and June, Lane and Lagarde could still regret their new commitments up front." That's great. (...) 

If eurozone core inflation continues to pick up in May and June, Lane and Lagarde can still regret their new commitment up front." extraordinary. (...) 

If core euro zone inflation continues to pick up in May and June, Lane and Lagarde could still regret their new commitments up front.”

Thus the voices of economists about high inflation in Germany are made, hopefully it will be useful