OPINION
Market Rating Before FOMC MeetingJan 31
Inflation is at 48-Year Peak in Germany
In Germany, the locomotive economy of Europe, the highest increase in consumer inflation, which has reached its highest level since 1974, was in the transportation group at the rate of 15.6 percent, followed by the housing group with 8.5 percent and the food and non-alcoholic beverages group at the level of 8.0 percent. . Looking at the sub-items of the transportation group, electricity increased 19.3 percent, natural gas 47.5% and fuel oil increased 98.6 percent on an annual basis.
On a monthly basis, the largest increases were observed in the entertainment and cultural group at a rate of 4.1 percent, the food and non-alcoholic beverages group at a rate of 3.3 percent, and the accommodation services and clothing and footwear group at a rate of 1.2 percent, respectively. During this period, compared to the previous month, transportation fell by 1.1 percent, housing by 0.2 percent and health care by 0.1 percent.
The report published by Destatis reveals that energy prices were the main factor in the increase in consumer inflation in April. In addition to the severe impact of the strong rise in energy commodities, especially crude oil and natural gas, on international markets due to the repercussions of the Russia–Ukraine war on the transportation group, price pressures related to increasing transportation costs have spread throughout the world. On the other hand, with the low borrowing costs in the region, it seems that domestic demand is especially alive in the housing group.
Energy pressure is still strong on an annualized basis, even though the inflation outlook decreased slightly on a monthly basis. An increase in the general level of prices can be observed in May and June. However, the strong base effect, which will start to come into play as of July, may lead to the formation of a peak region in the inflation trend.
