
Following the Covid-19 pandemic, the massive amount of stimulus, and amid the Ukraine-Russia war, Germany’s inflation has soared. Official data from Germany’s consumer price index (CPI) indicates that inflation jumped to a 10.9% annual pace in September and it’s the first time since the end of World War II that Germany has dealt with double-digit inflation.
German Inflation Shoots Up, Tapping Double-Digits September
The inflation rate has risen dramatically all around the world. Economists think that Europe’s energy crisis, which is linked to the Ukraine-Russia conflict is the primary reason. However, Europe, like the United States, deployed huge amounts of stimulus funds to support the economy during the Covid-19 epidemic. Germany passed a large number of stimuli packages to counter the effects of government-imposed business lockdowns and shutdowns.

On Thursday, Germany’s official CPI data shows the country’s inflation spiked at a 10.9% annual pace in September. Germany’s inflation is up from 8.8% the month prior and it’s the highest inflation rate Germany has seen since 1951, or roughly around the end of the second World War. When the European Union (EU), introduced the euro in 1999, Germany’s inflation was very close to two-digits. Statistics show that Germany’s energy prices are up a whopping 44% in September compared to this time last year.
“The high energy and food prices, which are likely to rise further in the coming year, are causing significant losses in purchasing power,” Torsten Schmidt, the head of economic research at the Leibniz Institute for Economic Research told the New York Times on Thursday.
Germany Leads the pack when it came to Covid-19 Stimulus packages and subsidies. To combat rising prices Parliament adds another package for $195 billion
Germany, in addition to the disaster caused financially by the Ukraine-Russian war, was an innovator when it comes to introducing stimuli programs. Germany implemented an $844 billion recovery plan between February 2020 and May 2020. It included $175 billion in stimulus funds and $675 million for lending. German governments also established wage subsidies programs that provided 60% of wages to employees.
A three-month payment suspension was also implemented for German-based consumer loan holders. The German Parliament then announced a $146 billion stimulus package at the end June. Germans who bought electric vehicles were also eligible for a $56 million rebate. While Germany’s red-hot inflation is high and economists believe it derived from a three-pronged problem tied to Covid-19, stimulus, and the war in Europe, German bureaucrats are planning to drop another package of subsidies.
German inflation rose to 10.9% at the same moment, while members of Germany’s Parliament presented another $195 billion package. Germany’s latest subsidy package also placed price limits on natural gas. The German government aims to “cushion rising energy costs and the most severe consequences for consumers and businesses,” officials said on Thursday. “Prices have to come down,” chancellor Olaf Scholz told reporters during a press conference. “To make prices drop, we are rolling out a wide defense shield,” the chancellor added.
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