Annual inflation over the course of 2021 rose more than three percent, climbing to its highest point since 1992. Germany’s Federal Statistical Office said that after a further price hike for consumers in December, inflation reached 3.1 percent on average for the year.
In 1993, the inflation rate soared to 4.5 percent, whereas during 2020, annual inflation hovered at 0.5 percent.
This comes as the German economy shrank by as much as one percent in the final three months of the year, with reduced output from the European country during coronavirus-related shortages and supply chain disruptions.
The Federal Statistical Office said the economy grew by 2.7 percent in 2020, but the final quarter did drop off compared to earlier parts of the year.
Although an improvement on last year, Europe’s largest economy is still trailing behind other key economies, like the UK, France and the US, for post-pandemic GDP.
Georg Thiel, President of the German statistics agency Destatis, said: “Despite the ongoing pandemic situation and increasing supply and material bottlenecks, the German economy was able to recover after the slump in the previous year, although economic output has not yet reached the pre-crisis level.”
Newly-installed German Chancellor Olaf Scholz has been criticised for “exacerbating the inflation problem” and “ignoring the needs of citizens”.
German economist Dorothea Siems argued that the new ‘traffic light coalition’ headed up by Mr Scholz had a hand in pushing up inflation rates.
She attributed “additional price pressure” to Mr Scholz’s “daring monetary policy”, adding it was “doing everything to exacerbate the problem”.
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He told members of the Free Democratic Party: “I promise that, with the means I have available, we will provide such solidarity-based support for the people who are particularly affected.”
A number of European governments have been weighing up how best to shield consumers and tide over suppliers as wholesale gas prices spiked.
The UK is looking into wading into the power market, with the UK Government considering footing the bill for increased prices, rather than consumers, it was reported on Wednesday morning.