The inflation rate in Germany has risen to its highest level in five years this year. This resulted in an initial estimate by Federal Statistical Office. Goods and services refore cost an average of 1.8 percent more than in previous year. 2016, DieInflationsrate was still 0.5, year before even 0.3 percent.

The rise is due to higher rents and rising prices for energy and food. Especially for food, Germans had to pay significantly more this year: On average, three percent compared to last year. Same for alcohol and tobacco. Dairy products and eggs cost almost ten percent more than 2016. Only vegetables were a little cheaper.

As Federal Statistical Office also increases wages, employees benefit from growing purchasing power. In third quarter of this year, real wages – gross salaries after deduction of consumer prices – rose by 0.7 percent compared to previous year. For entire year, Union-wide Hans-Böckler-Stiftung expects a real wages of 0.8 percent.

In February, inflation rate at 2.2 percent had reached highest level since mid 2012. Towards end of year, rise slightly flattened. Next year, however, forecasts continue with high prices. According to a forecast by Munich Ifo Institute, year 2018 could bring an increase of 1.9 percent, 2019 even by 2.2 percent.

The value calculated for 2019 would be above value defined by European Central Bank (ECB) as a target for European countries. The ECB is striving for inflation of just under two percent, as central bank alsIdealwert for economic activity and price stability. In March, ECB had lowered key interest rate to zero per cent in order to avoid risk of einesPreisverfalls. In addition, Kauftesie has a large volume of government bonds from euro countries, providing economy with money to strengn substantiate economy.

Date Of Update: 30 December 2017, 12:02