Inflation in Germany continued to rise in May. Consumer prices were 7.9 percent above the level of the same month last year, as the Federal Statistical Office announced on Monday based on preliminary data.

Inflation in Germany is scratching the eight percent mark. In May, inflation continued to rise from what might already be a record level: consumer prices were 7.9 percent higher than in the same month last year. This was announced by the Federal Statistical Office in Wiesbaden on Monday based on preliminary data.

This means that inflation in Germany has remained above the seven percent mark for the third month in a row. In March, the annual inflation rate jumped to 7.3 percent from 5.1 percent previously, and in April the annual inflation rate was 7.4 percent. According to preliminary figures, prices rose by 0.9 percent from April to May 2022.

Inflation rates at this level had not previously existed in reunified Germany. In the old federal states, you have to go back in the time series to the winter of 1973/1974 to find similarly high values. At that time, mineral oil prices had risen sharply as a result of the first oil crisis.

The sharp rise in energy prices is also currently driving inflation in Germany and in the euro area as a whole. This trend, which has been observed for months, has been exacerbated by the Russian attack on Ukraine. In addition, as during the Corona pandemic, the industry is struggling with the fact that supply chains are not working smoothly.

Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro. The federal government has put together two billion-dollar packages to relieve people.

In the meantime, the first interest rate hike in the euro area in eleven years has been targeted: The European Central Bank (ECB) has announced that it will end the currently negative deposit interest rate of minus 0.5 percent with two interest rate hikes in July and September. Rising inflation can be combated with higher interest rates.

According to the “Süddeutsche Zeitung”, insurance brokers report that Allianz wants to get rid of hundreds of medium-sized companies by increasing prices by up to 400 percent. Property insurance, which companies use to protect themselves against fire, storm damage and business interruption, is affected.