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Inflation

Higher fuel and food prices fan inflation in Germany

The recent floods in Germany caused food prices to soar in June, boosting the country’s inflation rate for the third consecutive month. But the government’s energy policy is also being blamed for higher bills.

Last month, the cost of living in Germany was 1.8 percent higher than in the same month a year ago, according to latest data released by the country's statistics office on Wednesday.

A rise by 0.1 percent from May meant that the annual inflation figure increased for the third month in a row after 1.2 percent inflation in May and 1.5 percent in June.

However, the increases are still below the 2 percent mark that the European Central Bank (ECB) considers as price stability.

Most notably, Germans' bills for food rose in June, increasing 5.4 percent from a year ago. Economists said this was the result of crop failures as a result of the massive flooding in Central Europe which had devastated harvests, especially in Germany.

Moreover, costs for energy were up 3 percent year-on-year. While fuels for heating and cars declined in the month, electricity bills jumped by a staggering 12 percent. This was due to higher state subsidies for renewable energies which are rolled over onto electricity prices under a German government policy.

Economists said they expected the German inflation rate to continue rising in the second half of the year, as consumer prices would increasingly reflect higher wages that had been enjoyed by many Germans in earlier months.

uhe/hc (dpa, Reuters, AFP)

DW.DE

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