The augmentation is the highest recorded since October 1974, when prices rose by 14.5 percent due to the global oil crisis. The rates this year have already seen July and August increase by 12 percent and 10.4 percent respectively. One of the main contributing factors to the jump in prices comes from the ongoing energy crisis encapsulating Europe.
Figures have shown that energy costs have leapt by 32.6 percent on average, with natural gas seeing the largest spike, with an eye-watering 58.9 percent increase.
With industry being a major contributor to Germany’s GDP, primary goods have also shot up in price, meaning production lines are forced to emulate the costs.
Intermediate goods such as wood and metals have risen in line with other products.
One potential reason for the sudden increase in prices could be the notion that the world is recovering from the recessions caused by the global pandemic.
Poland rages at EU’s ‘ridiculous’ proposal after Russia humiliation
With factories and industry back to near full capacities since various lockdowns brought the world to a standstill, the sudden surge in demand is being met with an increase in price, not only to meet the market requirements but also in a likely bid to recover loss of earnings seen over the last two years.
Complications in the global production of semi-conductors have also taken their toll on the German motor vehicle industry.
The Association of German Automobile Manufacturers (VDA) cut its forecast for production growth to 3 percent from 13 percent previously, saying that production in recent months had been “significantly below expectations”.
It now expects 3.6 million cars to be made in Germany this year, down by 400,000 units from its last forecast
With a coalition government likely to be in power, both the FDP and the Greens want the finance ministry job.
The FDP and Greens are, in some ways, similar. They are the two parties that contend for young people’s votes. Both take a strong line on civil liberties and have little time for accommodation with Russia and China. Both want to modernise Germany’s creaking infrastructure, especially when it comes to tech.
Yet the problem remains as to how Germany proceeds into the next term on its dealings with Europe.
Germany has long been the backbone of financial strength in the European Union and has often had to play a major contributing role in bailing out smaller member states in debt.
Although there are no current European debt crises of significant importance, the recovery period from the COVID-19 pandemic has yet to fully launch across all fields of industry, and countries in Europe, meaning a surprise may well lie ahead.
It remains to be seen whether Germany will be both willing to, or be able to afford to bear the brunt of any major financial commitments to its European member states sisters should disaster strike,
The EU itself is also licking over the financial wounds caused by the pandemic, scrambling to fund financial aid packages due to the virus by issuing up to 850 billion euros in bonds over the next 5 years.
For Germany, the rise to the top as Europe’s largest economy was done in true German fashion, with planning and technology key to its success, but as the purse strings now start to tighten, staying at the top will require a little more than just a “vorsprung durch technik”.
Additional reporting by Monika Pallenberg