Brussels (Brussels Morning) Inflation in Germany reached a 29-year high in November according to preliminary data released by the Federal Statistical Office (Destatis) on Monday.
The annual rate of inflation reached 5.2% in November, making it the fifth consecutive month of accelerating growth, RFI reports.
Destatis attributed the continuing growth in part to soaring energy prices, which increased 22% in November, and to global supply chain disruptions.
Last month, the annual rate of inflation stood at 4.5%, with the German Federal Bank predicting inflation would reach nearly 6% by the end of the year.
Inflation is affecting all parts of the eurozone, increasing the cost of living, which puts pressure on the European Central Bank (ECB) to tighten its expansive monetary policy.
ECB’s different view
The ECB insists that causes of inflation are temporary and maintains that tightening monetary policy too soon could jeopardise economic recovery from the coronavirus crisis.
Jens Weidmann, the head of the German Federal Bank who is scheduled to step down this year, warned that inflation could be less transitory than the ECB expects.
Inflation in Germany reached 6% in November, according to ECB’s preferred standard – the Harmonised Index of Consumer Prices (HICP), and was significantly above the bank’s target of 2%.
As authorities eased pandemic-related restrictions, demand started to recover and pushed up prices.
Destatis underscored the unfavourable comparison with 2020, by noting that Germany temporarily cut its sales tax last year while introducing CO2 pricing at the start of this year.
ING DiBa bank economist Carsten Brzeski noted that inflation growth in November was unexpected and predicted that it will continue to grow.
“The December inflation number could be a new record high since German reunification”, he said, adding that “it could take until the end of 2022 before headline inflation will drop below 2%, if not until 2023.”