German inflation hits a record 10% in September
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Germany’s inflation rate increased to a record 10% in September. The news comes after economic institutes predicted that the economy will shrink next year.
Inflation is forecast to average at 8.8% in the coming year
Munich’s Ifo Institute said in a statement earlier on Thursday that inflation would likely average at 8.8% in the coming year.
Inflation is expected to settle down in 2024 — “to be only slightly above the ECB’s target rate of 2%.”
German GDP is also expected to shrink by 0.4% in 2023, down from April’s estimate of 3.1% growth, before rebounding back to a state of growth in 2024.
The forecasts came Thursday as part of the so-called Joint Economic Forecast, which is prepared twice a year by the Ifo Institute in Munich, the Kiel Institute for the World Economy, the Halle Institute for Economic Research (IWH), and the RWI — Leibniz Institute for Economic Research.
The global economy is in the doldrums
Germany is not alone in the economic challenges it is facing. According to the joint statement, the global economy is in a downturn, with Russia’s war against Ukraine and subsequent Western sanctions against Moscow fueling the level of inflation for energy commodities.
The high levels of inflation have prompted the US Federal Reserve, along with many other central banks, to tighten monetary policy.
The joint report also pointed to China’s zero-COVID strategy, which prohibits economic activity during periods of lockdown, and a bubbling real estate crisis as having impacts on the economy.
Inflation ‘time bomb’: Food and energy prices soar in Germany
The Ukraine war has had repercussions around the world. In Germany, people are fearing for their prosperity.
As prices rise, more Germans turn to local food banks
Exacerbated by Russia’s strategic strangling of Europe’s gas supplies, inflation has risen in Germany.
Politicians and senior officials already warning that energy needed to be conserved ahead of the cold season this autumn.
Chancellor Olaf Scholz has called for the population to “link arms and stick together.”
fb, kb/sms (AFP, dpa)