Germany to see inflation ease at start of 2022 -economy ministry

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FILE PHOTO: People buy groceries at an Aldi supermarket as the spread of the coronavirus disease (COVID-19) continues, in Berlin, Germany March 24, 2020. Businesshala / Michelle Tantucci / FILE PHOTO
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BERLIN (Businesshala) – Germany’s inflation rate will drop significantly early next year once the effects of lump-sum factors wear off, the economy ministry said on Monday.

A base effect resulting from last year’s cut in value-added tax as part of the government’s COVID-19 relief measures has contributed to the current inflation rate of 4.5% – the highest since 1993. Its influence has increased sharply. Rise in raw material prices and energy prices.

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That sentiment shared by central banks was questioned by Deutsche Bank CEO Christian Sewing, who said the situation required a swift response.

The ministry said supply constraints have also increased further, which means that industrial activity is likely to remain sluggish in the coming year, despite a backlog of orders.

“This especially applies to the critical automotive industry, which is suffering from shortages of semiconductors,” the ministry said.

The ministry said that with the easing of coronavirus measures, service providers are on the lookout, who should be able to address the vulnerabilities in the industrial sector.

“Overall, however, Germany’s GDP should increase only slightly in the last quarter of the year,” it added.

The German government recently lowered its economic growth forecast for this year from 3.5% to 2.6%. In the coming year, this figure should increase by 4.1% compared to April’s prediction that it will grow by 3.6%.

Reporting by Miranda Murray and René Wagner; Editing by Katherine Evans

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