Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Germany sees further jump in inflation, stronger wage growth

EconomyJan 26, 2022 14:20
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Full shelves with fruits are pictured in a supermarket during the spread of the coronavirus disease (COVID-19) in Berlin, Germany, March 17, 2020. REUTERS/Fabrizio Bensch

BERLIN (Reuters) -The German government expects consumer price inflation to rise further this year, contrary to earlier projections, which will likely lead to higher wage demands by labour unions, the economy ministry said in its annual economic report on Wednesday.

The government predicts a national inflation rate (CPI) of 3.3% for 2022 after 3.1% in 2021 as higher energy costs and a scarcity of semiconductors and other intermediate products continue to push up overall prices, the ministry said.

"The federal government is closely monitoring the development of the inflation rate and the key factors driving prices, especially those linked to energy markets and supply chain disruptions," it said.

Presenting the report, Economy Minister Robert Habeck told reporters that Berlin expected inflation to ease next year to the European Central Bank's price stability target of around 2%.

To alleviate the strain of rising energy costs on households, the government is looking into scrapping a surcharge on electricity bills used to support renewable power already this year - earlier than initially planned, Habeck added.

The government also cut its economic growth forecast for 2022 to 3.6% from 4.1% seen in October, pointing to headwinds for the economy in the first quarter due to renewed restrictions in the coronavirus pandemic.

In the further course of the year, the government expects the economic recovery to pick up speed again as infection numbers are likely to fall in spring, allowing authorities to lift restrictions on hospitality and retail.

"Industry should also be able to expand its production noticeably again as soon as the supply bottlenecks gradually resolve over the course of the year," the ministry added.

The economic recovery and higher inflation will likely lead to "somewhat stronger wage growth" in 2022 after negotiated wage agreements last year turned out to be very moderate due to the economic slump in the pandemic, the ministry said.

But unions are unlikely to push through excessive wage demands that would exceed the kinds of pay hikes seen before the pandemic, the ministry said, adding: "There are currently no signs of a wage price spiral."

Central bankers are watching wage developments in the euro zone and Germany, its biggest economy, very closely. They are looking for any hints as to whether rising consumer prices lead to higher wages that could mark the start of a wage-price spiral and lead to higher inflation also in the medium term.

Germany sees further jump in inflation, stronger wage growth

Related Articles

Dollar recovers ground as risk appetite fades
Dollar recovers ground as risk appetite fades By Reuters - May 18, 2022 1

By Saqib Iqbal Ahmed NEW YORK (Reuters) -The U.S. dollar rose on Wednesday, on pace to snap a three-session losing streak, as concerns about the outlook for global economic growth...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Our Apps
© 2007-2022 Fusion Media Limited. All Rights Reserved.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
  • Sign up for FREE and get:
  • Real-Time Alerts
  • Advanced Portfolio Features
  • Personalized Charts
  • Fully-Synced App
Continue with Google
Sign up with Email