The German authorities are set to raise the inflation forecast for 2022 due to the crisis in Ukraine and its impact on the economy, Reuters reported on Monday, citing a government document.
According to the document, Berlin will raise the figure from the 3.3% forecast in January to 6.1%. Consumer price growth is expected to ease in 2023, with inflation predicted at 2.8%.
The German government is expected to officially unveil its spring economic forecast on Wednesday.
Annual inflation in Germany soared to its highest level in more than four decades last month, propelled by natural gas and oil prices, which jumped after the launch of Russia’s military operation in Ukraine and the Western economic sanctions against Moscow that followed.
Household gas and electricity bills in Germany also hit historic highs, prompting the authorities to launch relief measures worth roughly €16 billion ($17.2 billion) to help consumers cope with skyrocketing energy costs. The government also vowed to step up efforts to end dependence on Russian energy, but it is reluctant to place a complete embargo on gas, as alternative energy sources cannot be quickly found.
A Reuters survey published last week showed that one in 10 consumers in Germany were drawing from their savings to pay bills, while some were even forced to take out loans.
German businesses have also been hit. According to an Ifo survey published on Monday, around 40% of German companies have felt the impact of rising energy costs, while 90% were ready to hike prices for their products in order to cover the costs.
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