This is the biggest price shock since the founding of the Federal Republic!
In 2022, the inflation rate jumped to its highest level in over 70 years – 7.9% for 2022. Economists don’t expect a quick easing.
The announcement was made by the Federal Statistical Office on Tuesday, based on an initial estimate.
To find an equally high figure in the statistics of the Wiesbaden authorities, one has to go back far in time: in 1951, the then Federal Republic of Germany recorded an inflation rate of 7.6%. However, the calculation method has changed over time.
Even in reunited Germany, there has never been such a high inflation rate as in 2022. In 2021, consumer prices in Germany increased by an average of 3.1%.
Higher inflation rates reduce the purchasing power of consumers, who may pay less for a euro. People’s financial slack is shrinking, salary increases are being eroded by inflation.
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This number gives hope
Consumer prices in December were 8.6% above the level of the same month last year. That’s a lot, but it’s decreasing! In November, the annual inflation rate was still 10 percent, in October a record level of 10.4 percent was reached. So it’s already falling for the second month in a row.
Is this the turn in the crisis?
Economists assume this will dampen the rise in inflation in 2023. However, there are no signs of a rapid easing in prices: “Inflation is high and will only come down gradually,” Bundesbank President Joachim Nagel said recently.
After four consecutive interest rate hikes last year and a benchmark interest rate of 2.5 percent, the ECB is still not at the end of its fight against record inflation.
After the last central bank meeting in 2022, ECB President Christine Lagarde declared in mid-December: “We have a long way to go.”