Energy is 35 percent more expensive in the neighboring country than a year ago. There are also above-average price increases for groceries.
According to a quick estimate by Statistics Austria, the inflation rate in Austria in April rose from the end of the previous month to 7.2 percent. And in Germany, too, inflation is eating its way deeper and deeper into people’s household budgets. According to economists, consumers will have to adjust to inflation rates of more than 7 percent in the coming months. Significant price increases are affecting more and more areas of daily life. In April, consumer prices were 7.4 percent above the level of the same month last year. The Federal Statistical Office thus confirmed an initial estimate on Wednesday.
It was the highest level since German reunification in 1990. A similarly high inflation rate was measured in the old federal states in autumn 1981 as a result of the first Gulf War between Iraq and Iran. From March to April this year, consumer prices rose by 0.8 percent.
Soaring energy prices are fueling inflation. The war in Ukraine has reinforced this trend. In March, the annual inflation rate had already jumped to 7.3 percent. In addition, there are interrupted supply chains, among other things due to the corona lockdown in parts of China.
Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro. The federal government has now put together two billion-dollar packages to relieve people.
In April, energy prices rose by 35.3 percent compared to the same month last year. The prices for light heating oil almost doubled. Consumers also had to pay significantly more for petrol (38.5 percent) and natural gas (47.5 percent).
Food prices rose by an above-average 8.6 percent. The prices for edible fats and oils (27.3 percent) as well as meat and meat products (11.8 percent) rose particularly significantly. In addition, other goods also cost significantly more within a year, such as vehicles (8.9 percent) and information processing equipment (8 percent).
Continued high inflation rates
According to economists, people must continue to adjust to high inflation rates for the time being, also because many companies are passing on some of the increased energy and raw material costs and increasing prices. “Inflation in Germany should therefore also be over 7 percent in the coming months,” said Timo Wollmershäuser, head of economic activity at the Ifo Institute, recently.
For the year as a whole, economists recently expected an average inflation rate of more than 6 percent to almost 7 percent in Europe’s largest economy. Last year, the average rate was 3.1 percent.
The Deutsche Bundesbank now expects an average inflation rate of almost 7 percent. Mainly because of the increase in energy prices, inflation rates in the euro area have risen to an unprecedented level, said Bundesbank President Joachim Nagel on Wednesday at an event organized by DZ Bank in Berlin. The inflation rate in the common currency area climbed to 7.5 percent in April, the highest level since the introduction of the euro. All in all, price increases have become broader, Nagel said. The Bundesbank is now assuming “that the inflation rate in Germany will reach almost 7 percent in 2022”.