Home Business Inflation hits record high for over 30 years in Germany and Spain

Inflation hits record high for over 30 years in Germany and Spain

56
0

Inflation in Germany jumped to 7.3% in March over the last twelve months according to provisional figures published on 30th March. Spain suffers the same fate, with inflation reaching 9.8%. The figures for the month of March for France are expected Thursday, March 31 in the morning.

In Berlin as in Madrid, the rise in prices has reached record highs. Such a level had not been seen since November 1981 in Germany (then the FRG) and since May 1985 in Spain. The harmonized price index, which serves as a reference at European level, increases 7.6% for Germany, pulverizing the medium-term objective set at 2% by the European Central Bank (ECB).

→ THE FACTS. War in Ukraine: what were the previous “oil shocks”?

“Russia’s attack on Ukraine” is largely responsible for this explosion in Germany, corroborates Destatis, the German statistics office. The Russian invasion effectively caused a new surge in energy prices in Europe, Moscow being one of the main suppliers of hydrocarbons to the European Union.

Energy prices in Germany jumped by 39.5% in March compared to the previous year. A marked acceleration, while the increase was 22.5% in February and 20.5% in January, according to the institute.

Read:  in pursuit of Russian assets

Cereal prices soar

The war also increases the cost of foodstuffs, which rises by 6.2% in March, after 5.3% in February and 5.0% in January. Russia and Ukraine are indeed two major world exporters of cereals, particularly wheat. Nitrogen fertilizer prices, of which Russia is one of the main exporters, and energy prices also contributed to this increase.

Finally, the invasion increases the shortages of components and raw materials and further strains the supply chains already destabilized by the coronavirus pandemic, because of the sanctions against Russia. These shortages weigh down German industry, which is forced to pass on these additional costs to consumers. The price of goods thus rose by 12.3% in March.

The “wise”experts who advise the German government, have also revised their growth forecasts for 2022 from 4.6% to 1.8%, while counting on record inflation at 6.1%.

Read:  Development aid: with 300 billion euros, the European Union wants to counter China

A six billion euro plan to dampen inflation in Spain

According to INE, the Spanish statistics office, the dynamic is the same in Spain. The Governor of the Bank of Spain indicated on March 29 that he was anticipating a “new very significant rise in inflation in March” because of the war in Ukraine, which caused a “kind of energy shock”.

In an attempt to cushion the consequences of the war, the government of socialist Pedro Sanchez adopted on March 29 a direct aid plan of six billion euros for households and businesses, mainly targeted at the price of energy.

→ READ ALSO. In the United Kingdom, the specter of a major social crisis

This plan includes a subsidy of 20 euro cents per liter on fuel, a 15% increase in the amount of the subsistence minimum income, paid to the most vulnerable families. It also extends until June 30 the tax cuts in force since last summer and intended to offset soaring electricity bills.

Previous articleUkraine: two beer giants, Heineken and Carlsberg, withdraw from Russia
Next articleSale: Logitech’s POP Keys mechanical keyboard at 65 € on Amazon