German Inflation Hits a 29-Year High

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Germany’s inflation has hit 4.1% in September, the country’s highest mark for 29 years. The scenario has prompted economists in the European country to raise questions on the validity of the central bankers’ assurance that the current commodity price surges are temporary.

Remember, the last time Germany faced such an inflation rate was under Helmut Kohl’s reign as the chancellor. Then, the country was still using the Deutschemark and had just undergone reunification, catapulting commodity prices, and further issues, particularly in the east.

Commerzbank’s chief economist, Jörg Krämer, warned Germans to expect the worst in the coming years. According to Jörg Krämer, the locals must expect a tremendous inflation challenge both for Germany and the Eurozone in the long run, even if commodity price growth slows next year as promised by central bankers.

Germans Run to Gold

Germans are now running to gold because they understand stores of value and safe havens. They understand hyperinflation and the value of saving value in hard assets that have been around for a while. While aspects such as bitcoin can yield significant value in the short term, it is necessary to note that gold has been around for many different centuries.

One of the pressing points of the current time is to understand that inflation is a problem and to prepare accordingly.

More European Countries like Germany Are Seeing These Economic Issues

Other European economies like France and Spain have experienced a similar rise in inflation in the last few months. Germany, Europe’s largest economy, rose from 3.4% in August, while France’s inflation rate hit a decade-high of 2.7% and Spain hit a 13-year high of 4%.

But the soaring inflation rates in Germany and other parts of Europe can be attributed to the ever-increasing European energy prices, toughening supply chain bottlenecks in the international oil market that send shipping costs soaring. Such inefficiencies have left manufacturers under supplied critical materials. As a result, economists have projected that the Eurozone’s inflation rate will hit 3.3%, the highest since 2008.

Soaring energy prices have contributed to an import price increase of over 16% in Germany compared to 2020. This is the most significant increase the country has ever had since 1981. Analysts have revealed that citizens should expect lower inflation rates only when the energy import costs depreciate.