Updated June 16, 2021, 2:00 p.m.

  • In Germany, inflation has risen to its highest level since 2011. Experts expect further price increases in the coming months.
  • Consumers have to dig much deeper into their pockets than a year ago, especially for refueling and heating.
  • The development is a consequence of the corona crisis, but the newly introduced CO2 tax is also noticeable.

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At 2.5 percent, inflation in Germany has reached its highest level in almost ten years – and consumers will have to be prepared for price jumps in the coming months as well.

Economists anticipate that inflation will continue to rise in the current year, the Bundesbank believes temporarily inflation rates of four percent are possible.

Why is inflation rising so rapidly at the moment?

According to the Federal Statistical Office, rising energy prices in particular fueled inflation in May. According to calculations by the Wiesbaden authority, energy rose by ten percent within a year.

One reason for this above-average increase is a so-called base effect: a year ago, with the outbreak of the corona crisis, crude oil prices temporarily collapsed due to low demand on the world market. They have since recovered.

In addition, since January 25 euros have been levied in Germany per tonne of carbon dioxide (CO2) that is produced when diesel, petrol, heating oil and natural gas are burned. That drives up the prices for heating and refueling. For heating oil (plus 35.4 percent) and fuels (plus 27.5 percent), consumers had to dig much deeper into their pockets in May of the current year than a year ago.

Without taking energy prices into account, the inflation rate would have been 1.8 percent in May 2021 according to calculations by statisticians, without heating oil and fuels even only 1.6 percent.

Instead, inflation in Germany has risen steadily since the beginning of the current year after temporarily negative inflation rates in the second half of 2020. A second price driver: the VAT, which was lowered for half a year in the corona crisis, has been back at its old level since January.

How much do consumers feel this in their wallets?

Two examples: According to an evaluation by the Check24 booking portal, a family with 5,000 kilowatt hours of annual electricity consumption currently pays an average of 1,524 euros – and thus more than ever before in the period under review since 2007. Heating oil has been measured against an order of 2,000 liters since the low in September (770 euros) 65 percent more expensive.

Food prices rose by 1.5 percent in May. Consumers had to dig deeper into their pockets than a year before, among other things for edible fats and oils (plus 3.8 percent) as well as bread and cereal products (plus 2.2 percent). In contrast, the price increase for vegetables was below average (plus 1.1 percent).

Plants and flowers (plus 7.6 percent), bicycles and e-bikes (plus 4.2 percent) and tobacco products (3.9 percent) were noticeably more expensive. In contrast, mobile phones were significantly cheaper (minus 6.9 percent).

Is it going to continue like this with rising inflation?

Probably not. Economists are giving hope for 2022: According to the Bundesbank, special effects such as the CO2 levy and the return of VAT to its old rate will have less impact in the coming year.

Accordingly, inflation in this country should then move around 1.8 percent. (mcf / AFP / dpa)

The price of grain is increasing worldwide. This could also soon make itself felt in German supermarkets. Meat production in particular would become more expensive due to the feed. (Teaser image: IMAGO / imagebroker)