Bundesbank: Inflation bleibt bis ins nächste Jahr hinein „merklich erhöht“

Berlin - The Bundesbank predicts persistently high price pressures in the coming months, stating that Germany's inflation rate will remain noticeably elevated throughout the next year, according to their monthly report released on Monday. The inflationary pressure stemming from commodity price shocks is only slowly abating. While there are currently few indications that inflation will rise as steeply as it did in 2022 following Russia's invasion of Ukraine, returning to the targeted 2% mark will "take some time."

Record-high prices for gasoline and diesel, as well as expensive heating oil, caused consumer prices to surge by 3.3% in September, the largest increase in nearly three years. World market prices for crude oil had surged above $100 per barrel due to the Iran war. The experience shows that such shocks only gradually affect the entire consumer basket.

"The dynamics of consumer prices for gas and electricity, food, and other goods and services are expected to increase only gradually," warned the Bundesbank. Furthermore, services had already been overpriced before the war in the Middle East. "The still pronounced wage growth currently contributes significantly," emphasized the German central bank.

The energy price increase is more concentrated on oil and refined products, less on gas and electricity, due to long contract periods, fixed tariffs, and hedging strategies of suppliers. Simultaneous large fluctuations in food commodity prices and exchange rate shocks were absent. Additionally, demand was weaker, and the supply chain situation was favorable.

"Under such starting conditions, the likelihood is low that companies will adjust prices more frequently and transmit cost shocks more strongly than usual," stated the Bundesbank.