Belgium, (Brussels Morning Newspaper) Inflation in Germany continues to pick up pace according to the latest data released by the German Federal Statistical Office (Destatis) yesterday.
Compared to February last year, consumer prices were roughly 5.3% higher this February, DW reported.
The inflation rate was 0.9% higher last month than in January this year whereas the monthly inflation rate stood at 5.3% in December 2021, which proved to be the highest in the last three decades or so.
The main drivers of inflation in February were energy prices followed by the various challenges brought on by the coronavirus crisis, including “delivery bottlenecks and significant price increases at upstream stages in the economic process”, according to Destatis.
German officials warned that uncertainty caused by the war in Ukraine and sanctions against Russia are adding to existing price pressures.
Reliance on energy from Russia
Western sanctions are affecting Russia’s economy as well as energy prices in Europe given the many European countries that rely heavily on Russian oil and gas.
Fritzi Köhler-Geib, chief economist of the German state-owned KfW investment and development bank, pointed out that gas and crude oil prices are “likely to remain decisive for the development of German consumer prices in the coming months.” She warned that additional sanctions from Western countries could result in further price rises.
Her counterpart at HQ Trust financial services provider, Michael Heise, predicted that inflation would remain close to 5% in the coming months. “Due to the Ukraine crisis, consumers are not expected to see relief in energy prices any time soon”, he indicated.
Inflation figures from other parts of the eurozone are to be released today and the European Central Bank (ECB) is to discuss measures aimed at reining in inflation next week. Some experts expect the ECB to tighten monetary policy faster than originally planned in order to cushion negative effects of the war in Ukraine.
Since most sanctions and their effects on global markets registered at the end of February, Destatis did not comment on whether their impact might be more pronounced this month.
Last week, Germany’s Minister for Economic Affairs and Climate Action, Robert Habeck, noted that the country might extend the operation of its nuclear power plants in order to strengthen power supply.