Inflation is the first concern of the Germans, ahead of the pandemic and Ukraine


CORRESPONDENT IN BERLIN

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There is no doubt that they are aware that we have been in a global pandemic for two years, with enormous loss of human lives and health, economic and psychological consequences of which we are still only seeing the tip of the iceberg. Needless to say, you’ve heard of Ukraine, where a war threatens to break out, at the gates of Europe, to which they would be bound to go by treaties and alliances. Climate change, migration crisis, lack of supplies, breakdown of global trade chains… they know it all. But when Germans are asked what worries them most, they unhesitatingly point to inflation. This is demonstrated by the “Security Report”, a representative survey carried out by the Center for Strategy and Senior Leadership, along with the prestigious Allensbach Public Opinion Institute, which was published this morning in Berlin.

Of the 1,090 Germans over the age of 16 who were surveyed between January 6 and 20, 70% said they were “very worried” about the sharp increase in prices. “The high rate of inflation is increasingly alarming the population and is having a higher-than-average impact on the weakest social classes,” he explains. Renate Köcher, del Instituto Allensbach, «one in two people feels personally threatened by the consequences of inflation and believes that the rise in prices is already affecting them or will soon affect them for the worse».

Last December, the rate of german inflation it was 5.3%, the highest level in the last 30 years. This January, it has fallen slightly, according to an estimate by the Federal Statistical Office, to 4.9%, due to the entry into force of a reduction in the VAT. But the harmonized data, to make it compatible with that of the rest of the European countries, rises to 5.1% year-on-year and is still well above the level that the statute of the European Central Bank sets as “price stability”, which is around two%. “There are very tangible price increases, such as those for energy,” says Köcher, “citizens see the bill and can encrypt the increase themselves because they know how much they paid previously for more or less the same consumption, so they are very aware of their loss of purchasing power.

The fact is that, according to the calculations of DZ Bank Research, high inflation rates can help to significantly reduce the level of debt of European countries in the medium term, since public debt is a nominal value whose real value decreases due to inflation. While France can hardly benefit due to particularly high primary deficits, Germany would benefit. But that is not seen by German citizens, more concerned, according to Köcher, by the fact that it costs them more to make ends meet.

«Everything is stopped. I believed that as the months went by, we would overcome the pothole of the pandemic. But there are still hardly any customers because everyone is watching the price rises with concern and believes that it will not be a good time to buy until they go down,” he says. Friz Hesselmanndependent on a car dealership berlin wedding. «Inflation, yes, my grandfather always talked about that», agrees a potential client who, however, does not expect to buy a car for now, «if you do not have much urgency, and that is not my case, then you sit down to wait to make the prices a little easier on your pocket.”

Concern in companies

Beyond public concern, industry and commerce are also increasingly concerned about persistently high inflation. The president of the Association of German Chambers of Industry and Commerce (DIHK), Peter Adrian, has demanded clear signals from the European Central Bank (ECB) and the federal government in the face of the sharp rise in prices. “For companies, this means far-reaching increases in the costs of raw materials, energy and transportation. We are not yet in a dramatic situation. But German companies are waiting for a well-measured interest rate signal from the ECB at your next meeting. Because a weak euro makes energy imports even more expensive, ”explains his claim.

According to a current survey of the DIHK, three-quarters of German companies consider that high electricity and gas prices weigh on their current business. “Nearly half of companies fear the cost burden of going out of business or losing their own competitiveness.”

“A change in monetary policy should not be delayed any longer in view of the inflation figures for Germany and other countries in the European monetary union,” agrees the chief economist of the HQ Trust, Michael Heise. The Economist Nils Jannsen, of Kiel Institute for the World Economy, fears for his part that expectations threaten that inflation “will remain at a high level for longer, high inflation would consolidate.” “With energy and raw material prices skyrocketing, additional government charges are now put to the further test,” Adrian notes, “the faster abolition of the renewables surcharge on the electricity bill, as promised Federal Finance Minister Christian Lindner, would be an important first step in reducing the risk of an inflationary spiral.

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