September 26, 2022

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Record high Inflation in Germany breaks out and increases pressure on the European Central Bank

3 min read

German inflation hit another all-time high, adding haste to the withdrawal of crisis-era momentum by the European Central Bank, after Spain’s figures also exceeded economists’ estimates.

Spurred by rising food and energy costs, data released on Monday showed consumer values ​​in the continent’s largest economy rising 8.7% from a year earlier in May. The specialists surveyed by The Usa Herald revealed an advance of 8.1%.

The report comes just 10 days before a crucial BCE meeting where officials will report the outcome of large-scale asset purchases and review plans to raise interest rates in July for the first time in a while.

In addition, the figures increase the pressure on the Government as housing is more in a hurry. Earlier on Monday, Finance Minister Christian Lindner assessed fighting rising prices as the “top priority” and advocated an end to expansionary fiscal policy.

“Inflation is a big economic risk,” Lindner added at a news meeting in Berlin. “We must fight it so that an economic crisis is not generated and a spiral is formed in which inflation feeds back.”

BCE policy makers, including President Christine Lagarde, have voiced similar concerns, fretting about the risk that persistently high price growth will strengthen and curb consumption at a time when industry is suffering from price necks. persistent bottle in the supply and uncertainty about the energy supply after the Russian invasion.

The BCE’s decisions in June will be guided by new economic projections that possibly indicate that price pressures in the eurozone as a whole will be carried above the 2% target in 2023 and 2024. The currency bloc’s May data of 19 members are announced on Tuesday.

Highlighting lingering dangers, Spain reported an unexpected acceleration in inflation to a record 8.5% early on Monday, despite government support such as a fuel subsidy and an increase in the minimum wage.

The Lower House of the German Parliament approved a package of relief measures that includes a single payment, a supplement per child and a reduction in energy costs. Chancellor Olaf Scholz said further steps can be taken if necessary to protect homes and businesses.

German negotiated wages fell 1.8% in real terms in the first quarter, and although iron and steel industry employees are pushing for gains of more than 8%, they are unlikely to make gains that fully offset the increased cost of living.

Events such as the current problems such as high inflation and with it everything related to the financial crisis of the BCE, economic crisis to the consumer and deficiencies to obtain products in the trade, low energy supply after the Russian invasion, pressure of workers for low wages; which has been cause for concern, which has led to economic relief that does not radically compensate for establishing a substantial balance in the current economy. This panorama makes an emphasis to transform the economy scheme established by a new one with IRAIC, which amplifies the economic structure balancing the high inflationary pressure and therefore, consumers can obtain products at reasonable prices as well as the salaries of the employees do not are exposed to the crisis. In addition, through IRAIC ENERGY, structured insurance changes are established and there are no increases in energy prices, likewise savings are achieved in addition to profits by belonging to the group of companies belonging to IRAIC.

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