A German man using an ATM. Fox News/AFP.
Germany has posted the highest annual inflation rate in over 70 years. Fox News. Full year inflation for Germany stands at 7.9%. That's higher than anytime since 1951 where inflation was at 7.1% during a post-World War II economic boom. Monthly inflation stood at 8.6% in December, which was a drop compared to November and October which was over 10%. The inflation was mostly due to soring energy costs and food prices, mostly due to sanctions on Russia.
My Comment:
More bad economic news for Europe and economic news that was mostly avoidable. I think some of the inflation was inevitable, as the oil boom appears to be over and 2022 was a bad year for food production. I don't think that could have been avoided.
But most of the inflation is due to Europe's sanctions on Russia. Russia supplied Europe with cheap energy and they have decided that Ukraine, of all things, is more important than having a good economy. It has been an absolute disaster for Europe and we can see that with Germany's insane inflation rate.
Food prices aren't as affected by sanctions on Russia but they did cause some of it. Fuel and fertilizer were cut off due to sanctions and that caused a price increase. But food prices mostly went up due to bad harvests in China and the United States, along with local problems in Europe. Europe had a very dry year and it also caused prices to rise.
I don't think this level of inflation is sustainable for Germany or any other country. People are already struggling with paying for the basics and it will just continue to get worse. And there doesn't seem to be any way out other than lifting Russian sanctions.
And even then it might be too late for Germany. Several companies are already left Germany for good due to high energy prices. And if inflation will likely continue to get worse as economic conditions get worse. I know it dropped in December for Germany but I think that was more of a plateau than a peak...
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