Inflation in 2021 at its highest level since 1993

Status: 01/06/2022 2:25 p.m.

Fueled by higher energy prices, the inflation rate in Germany rose to 3.1 percent in 2021 – the highest level since 1993. According to the Federal Statistical Office, inflation rose further to 5.3 percent in December.

Strong increases in energy prices, delivery bottlenecks and the withdrawal of the temporary VAT cut have led to inflation rising to 3.1 percent in 2021, according to an initial estimate by the Federal Statistical Office. The authority had last measured a stronger increase in consumer prices on an annual average in 1993 at 4.5 percent at the time. In the corona crisis year 2020, the annual inflation was still 0.5 percent.

Higher inflation weakens the purchasing power of consumers because they can then buy less for one euro than before. According to economists, it hits poorer households particularly hard. Because they have to spend a large part of their income on essential goods such as housing or food.

Subsidy for recipients of housing benefit in planning

The Federal Ministry of Construction is currently working to ensure that recipients of housing allowance receive an increased allowance for heating costs in the summer – in good time for ancillary costs settlement with the costs for the winter. Rising inflation rates are also bitter for savers. As a result, the bottom line is that savings with low interest rates lose their value.

In December 2021, consumer prices are estimated to have increased by 5.3 percent compared to the same month last year, according to the Federal Statistical Office. In November, the monthly measured inflation rate for the first time since the reunification boom in the early 1990s exceeded the mark of 5.0 percent at 5.2 percent.

Increased energy prices one of the reasons

Inflation in Europe’s largest economy was fueled last year primarily by the rapid rise in energy prices in the wake of the global economic recovery after the Corona crisis in 2020. At the same time, the withdrawal of the temporary VAT cut had an impact: the regular tax rates, goods and services have been in effect again since January 2021 tended to be more expensive year-on-year.

In addition, there were material shortages and delivery bottlenecks as well as the introduction of the CO2 levy at the beginning of 2021 of 25 euros per ton of carbon dioxide that is produced when diesel, petrol, heating oil and natural gas are burned. Since the beginning of the current year, 30 euros per ton are due.

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