EU at ‘crunch point’ over future of the Eurozone says expert
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Last month, consumer prices in Germany were 3.8 percent above the level of the same month last year, the latest data from the Federal Statistical Office has revealed. This is the highest level since December 1993 where it had jumped to 4.3 percent. In June, the inflation rate was down at 2.3 percent. The latest figures will come as a huge worry to the European Union, as Germany is home to the bloc’s largest economy.
The huge jump in the latest inflation rate has been largely driven by rising energy prices, which increased by 11.6 percent.
Following the start of the Covid pandemic early last year, crude oil prices plummeted because of the low demand on the global market.
But world economies continue to bounce back from the pandemic, those prices are quickly recovering.
In July, the price of heating oil had surged by more than 50 percent compared to the same month a year ago.
Petrol was also significantly more expensive, with prices jumping by 24.7 percent.
Without taking energy products into account, the inflation rate would have been just 2.9 percent in July – almost down by a full percentage point.
Also last month, food prices were also on the increase, with consumers having to pay 4.3 percent for their items.
Another key driver behind the huge surge in interest rates can also be attributed to the so-called base effect.
The federal Government in Germany had reduced VAT for six months between July 1, 2020 until December 31, 2020 in order to stimulate consumption at the peak of the Covid pandemic.
It means the normal rates of VAT have been in place since the start of this year, which has consequently driven up the prices of goods and services.
This has triggered fears inflation will continue to rise over the coming months.
Additional reporting by Pallenberg.
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