Germany’s annual inflation rate rose from 8.2% last month to 8.5% in July. This is because there was concern that the already record-breaking energy prices would rise further as the supply of natural gas from Russia was further reduced.
Official data released Thursday showed that energy prices rose more than 35% from a year ago and remained the most important factor in driving inflation in Europe’s largest economy.
“Especially since the beginning of the war in Ukraine, energy prices have risen sharply and have had a major impact on high inflation,” the Federal Bureau of Statistics said in a statement. He said the continued disruption of the supply chain caused by the coronavirus pandemic and the leap in production costs for industrial products were the driving forces behind the increase.
The overall increase was surprising. Analysts predicted lower inflation, according to a Bloomberg and Reuters study.
So far, energy providers have been blamed for the exorbitant rise in natural gas prices. Uniper, one of the financially distressed energy companies, was bailed out last week by the government, which acquired a 30% stake. But from this fall The government will introduce an additional energy charge of a few cents per kilowatt hour into the consumer energy charges passed to the utility. Authorities expect this fee to increase by hundreds of euros per household per year.
Germany, which relies on Russia’s natural gas for about one-third of its needs, was particularly hit by Russia’s decision to significantly reduce its fuel supply. This week, energy giant Gazprom reduced the flow from the Nord Stream 1 pipeline to Germany to 20% of its capacity. This further limits the already restricted deliveries.
Economist said the country At the edge of the recessionAs corporate sentiment declines, authorities are urging citizens to reduce their energy use as much as possible, even in the cold showers.
Last week, the European Central Bank raised interest rates for the first time in more than a decade to curb inflation amid growing concerns about a slowdown.
Global outlook has deteriorated in recent months as inflation has risen to seemingly every corner of the economy and the turmoil caused by pandemics continues to disrupt supply chains. The dimming outlook is particularly acute in the euro area, which is a block of 19 countries that use the euro.
