Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Germany sees further jump in inflation, stronger wage growth

EconomyJan 26, 2022 09:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Full shelves with fruits are pictured in a supermarket during the spread of the coronavirus disease (COVID-19) in Berlin, Germany, March 17, 2020. REUTERS/Fabrizio Bensch

BERLIN (Reuters) -The German government expects consumer price inflation to rise further this year, contrary to earlier projections, which will likely lead to higher wage demands by labour unions, the economy ministry said in its annual economic report on Wednesday.

The government predicts a national inflation rate (CPI) of 3.3% for 2022 after 3.1% in 2021 as higher energy costs and a scarcity of semiconductors and other intermediate products continue to push up overall prices, the ministry said.

"The federal government is closely monitoring the development of the inflation rate and the key factors driving prices, especially those linked to energy markets and supply chain disruptions," it said.

Presenting the report, Economy Minister Robert Habeck told reporters that Berlin expected inflation to ease next year to the European Central Bank's price stability target of around 2%.

To alleviate the strain of rising energy costs on households, the government is looking into scrapping a surcharge on electricity bills used to support renewable power already this year - earlier than initially planned, Habeck added.

The government also cut its economic growth forecast for 2022 to 3.6% from 4.1% seen in October, pointing to headwinds for the economy in the first quarter due to renewed restrictions in the coronavirus pandemic.

In the further course of the year, the government expects the economic recovery to pick up speed again as infection numbers are likely to fall in spring, allowing authorities to lift restrictions on hospitality and retail.

"Industry should also be able to expand its production noticeably again as soon as the supply bottlenecks gradually resolve over the course of the year," the ministry added.

The economic recovery and higher inflation will likely lead to "somewhat stronger wage growth" in 2022 after negotiated wage agreements last year turned out to be very moderate due to the economic slump in the pandemic, the ministry said.

But unions are unlikely to push through excessive wage demands that would exceed the kinds of pay hikes seen before the pandemic, the ministry said, adding: "There are currently no signs of a wage price spiral."

Central bankers are watching wage developments in the euro zone and Germany, its biggest economy, very closely. They are looking for any hints as to whether rising consumer prices lead to higher wages that could mark the start of a wage-price spiral and lead to higher inflation also in the medium term.

Germany sees further jump in inflation, stronger wage growth

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email