Although double-digit inflation has been experienced many times in different governments since 1951 in Turkey, Germany has always remained below 10%.
Speaking to the Rheinische Post newspaper published in Germany, Central Bank Governor Nagel reminded that the two practices within the scope of the measures the government is considering to control inflation will end in the coming days and prices will move up again.
Germany had reduced transportation for 3 months.
Fuel prices have more than doubled both in Turkey and in the world due to the Russian-Ukrainian war, Germany has cut taxes on gasoline and diesel fuels for the summer months, and has gone for a three-month discounted ticket campaign in public transportation. Nagel stated that the end of these two practices will increase the inflation rate by about one point.
A contribution of 2.4 cents per kilowatt-hour will be added to gas prices in order to alleviate the burden of gas suppliers in Germany, which has increased due to the rising costs due to the war in Ukraine. This increase, which will be implemented as of October 1, is expected to be reflected in the gas bills of the households in November or December. Economists stated that the contribution margin is expected to drive inflation higher. Following the announcement of the contribution, the government announced that the Value Added Tax (VAT) rate in natural gas consumption would be reduced from 19 percent to 7 percent in order to reduce the impact of this practice on the pocket of the citizen.
10% inflation in Germany after 71 years
Central Bank Governor Nagel said, “There is a contribution fee for gas. On the other hand, he predicted that reducing the VAT on gas will reduce prices” and said, “Taking all this into consideration, it is possible that we will encounter an inflation rate of 10 percent in the autumn months”.
Stating that double-digit inflation was last seen in Germany about 70 years ago, Nagel reminded that the inflation rate in 1951 was 11 percent. Nagel stated that he expects inflation in Germany to be at the level of 6 percent next year.