The German economy may be about to take another turn for the worse, with inflation once more climbing – reaching a rate of 2.8 percent in then year to May.
That rate is slightly higher than then rest of the Eurozone and is higher than the rate of inflation in the UK – which is 2.3 percent at last measure.
Ruth Brand, President of the Federal Statistical Office said, in a press release: “The inflation rate is slightly up again, mainly due to the continued increase in service prices.
“By contrast, energy and food prices have had a dampening effect on overall inflation since the beginning of the year.”
The European Central Bank (ECB) which sets interest rates across the Eurozone, recently cut rates from 4 percent to 3.75 percent.
There are concerns in Berlin that a further reduction in interest rates could see German inflation increase further.
However, ECB President Christine Lagarde was tip-lipped about future interest rate plans.
According to AP, she said: “We will keep policy rates sufficiently restrictive for as long as necessary. We are not committing to a particular rate path. Are we today moving into a dialling-back phase? I wouldn’t volunteer that.”
According to Euronews, the economy has been struggling recently as inflation rose, but recently saw things become better and prices drop. This return to an increase in inflation will be unwelcome news for Germans, as it could risk becoming ‘the sick man of Europe’ again.
This unwelcome economic news comes off the back of a terrible European Elections for the governing coaltion, led by Chancellor Olaf Scholz.
Mr Scholz’s Social Democratic Party (SDP) only managed 13.9 percent of the vote, while the Christian Democrats garnered 30 percent and Alternative for Deutschland (AfD), known to some as “far-Right”, claimed 15.9 percent.
The Chancellor’s coaltion partner, the Greens, took a meagre 11.9 percent.
