Inflation in Germany hit 7.9 percent in May, the highest level since the first oil crisis in the winter of 1973/1974, according to preliminary figures published by the Federal Statistical Office (Destatis) on Monday, Reuters reports.
Amidst wheat shortages and fears of a global food crisis, food prices increased by 11.1 percent, while energy prices soared by 38.3 year-on-year, according to Destatis.
The spike in energy prices has been caused by the Russia-Ukraine conflict, and has had a "considerable impact on the high inflation rate," Destatis said. Meanwhile, supply chain interruptions caused by the COVID-19 pandemic have also pushed up inflation.
International prices have been following a similar trend. Germany's import prices in April were up 31.7 percent year-on-year, according to Destatis. With a plus of more than 300 percent, natural gas had the biggest influence on energy prices, followed by crude oil with prices up 77.5 percent year-on-year.
In order to cushion rising energy prices, German fuel tax will be temporarily lowered, and citizens will receive a one-off energy allowance of 300 euros (323 U.S. dollars). To support the switch from cars to buses and trains, a cheap public transport ticket will also be made available during the summer, for just nine euros per month.
The German government expects an annual inflation rate of 6.1 percent for 2022, a "figure otherwise seen only in exceptional cases, such as during the oil crisis". However, it said inflation is set to drop again next year.
Consumer sentiment in Germany remains at an all-time low, according to market research institute GfK. Despite further easing of COVID-19 restrictions, the Russia-Ukraine conflict and high inflation are "weighing heavily on consumer sentiment," said GfK consumer expert Rolf Buerkl.
