German inflation hits highest level since 2018


Germany’s inflation rate rose to 2.4% in May, the highest level in more than two years. This move may intensify the debate about whether Europe’s ultra-loose monetary policy will cause the region’s largest economy to overheat.

The Federal Statistics Office said on Monday that the harmonized consumer price index has reached the level of October 2018, mainly due to a 10% year-on-year increase in energy prices.

Conservative commentators in Germany have long been worried about high inflation and worried that the European Central Bank’s loose monetary policy will lead to a spiral increase in the cost of living. The Bundesbank predicts that the monthly inflation rate may reach 4% later this year.

Since the beginning of this year, Germany’s inflation rate has risen faster than most other Eurozone countries due to temporary cuts in Germany’s value-added tax, new carbon taxes and a re-weighted reversal of the product package used to calculate prices.

Earlier on Monday, the Spanish Statistics Agency stated that its inflation rate had climbed from 2% in April to 2.4% in May, mainly due to rising energy prices. According to the Italian National Bureau of Statistics, the inflation rate in Italy rose from 1% to 1.3% during the same period.

Euro zone price growth data will be released on Tuesday. Economists surveyed by Reuters predict that the euro zone’s inflation rate in May will rise from 1.6% to 1.9%. This will be in line with the European Central Bank’s target of slightly less than 2%, but its policymakers are expected to maintain monetary policy unchanged when they meet next week.


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