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German inflation hits post-reunification high at 7.3 percent

AFP
AFP - [email protected]
German inflation hits post-reunification high at 7.3 percent
A shopper carrying bags in Erfurt. Photo: picture alliance/dpa/dpa-Zentralbild | Martin Schutt

Inflation in Germany surged in March to a record high since reunification in 1990, official figures published Wednesday showed, as the war in Ukraine sent energy prices soaring.

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Consumer prices rose by 7.3 percent annually, according to the federal statistics agency Destatis, up from 5.1 percent in February.

Russia's invasion of its neighbour had sent prices for oil and gas soaring and had a "considerable impact on the high rate of inflation", Destatis said
in a statement.

READ ALSO: Germany's consumer prices set to rise steeply amid war in Ukraine

The last time such a high rate was recorded was in the autumn of 1981 in West Germany, when oil prices increased "sharply" as a consequence of the Iran-Iraq war, the agency said.

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Delivery bottlenecks, aggravated by disruptions to suppliers in Ukraine and Russia, also contributed to the inflation push.

Like many of its neighbours in Europe, Germany is highly reliant on supplies of Russian oil and gas to power its industry and heat its homes.

Germany has opposed calls for an EU embargo on Russian fossil fuels, but fears that deliveries could be curtailed have pushed the prices for the commodities to new highs.

READ ALSO: Why Germany has urged households and businesses to cut back on gas

The previous inflation peak for a reunited Germany came in early 1992, when prices rose year-on-year by 6.2 percent each month between March and May.

Broken down, the cost of household energy and motor fuels rose in March this year by 39.5 percent year-on-year, according to Destatis, while food prices increased 6.2 percent.

READ ALSO: The grocery products in Germany getting more expensive

On the harmonised index of consumer prices, the European Central Bank's preferred measure, inflation in Germany rose from 7.6 percent in March.

In the eurozone as a whole, inflation sat at 5.8 percent in February, an all-time high for the currency club and well above the European Central Bank's two-percent target.

With the war continuing to put pressure on prices the only way for inflation in Germany was "up" with the possibility the rate could enter "double-digit territory", according to Carsten Brzeski, head of macro at the ING bank.

'Sharp price increases'

Meanwhile, a survey by the German Ifo institute, also published Wednesday, showed "more and more companies are planning to raise their prices over the next three months".

Consumers have to prepare for "sharp price increases", the Munich-based think tank said, with food retailers in particular expecting rises, as the war drives up the cost of agricultural imports.

Germany's three largest unions, IG Metall, IG BCE and IG BAU, earlier in the week called on the government to provide support for particularly energy
intensive industries.

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