aGiven rising energy prices, Commerzbank expects inflation to rise further in the coming months. “If energy becomes more expensive, inflation could rise to five percent in November,” said Jörg Kramer, chief economist at Commerzbank for the newspaper Bild.
Kramer sees some relaxation in the coming year. “Inflation continues to rise before falling again after the end of the year,” the economist said. Among other things, this is due to the fact that special factors such as interim reduction in value added tax will no longer be applicable. Statisticians speak of the so-called base effect as an increase in the visible appearance of prices as the value-added tax was raised to the base level.
Expensive energy raised inflation in Germany in September above four percent for the first time in nearly 28 years. According to the Federal Statistics Office, the cost of goods and services is 4.1 percent higher on average than a year ago. In this context, Kramer already considered possible “five up to the decimal point”.
Union of municipalities calls for heating subsidies
Gas prices in European markets had hit a new record high in the past few weeks, raising concerns about a winter shortage. Faced with rising prices, the Association of Towns and Municipalities is seeking higher heating cost subsidies from the federal government for low-income households. General Manager Gerd Landsberg told the newspaper Bild: “We are seeing an explosion in energy prices, especially for gas.” Energy shouldn’t just be “something for the rich”. “That’s why the next federal government is called upon to support particularly economically vulnerable families and reduce the explosion in heating costs.”
Landsberg also warned of high costs for municipalities. The sharp increase in gas prices “will hit many municipalities hard – through higher energy costs for buildings and higher heating costs for Hertz IV recipients”. According to Landsberg, municipalities are expected to have a budget deficit of between eight and 8.5 billion euros this year. It could be similarly high next year as well.
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