German Inflation Hits Record of 5.2%
Germany's inflation has been exacerbated by the post-COVID easing of restrictions and its repercussions.
German consumer prices hit the highest increase in decades this November, preliminary data revealed Monday.
European Central Bank chief Christine Lagarde warned against tightening monetary policy too early, saying it would hurt the region's recovery.
Germany, Europe's top economy, rose to 5.2%, Destatis, the federal statistics agency, said.
Inflation was driven by soaring energy costs and supply chain bottlenecks. Energy prices alone surged by 22% in November.
Germany's inflation had increased in October by 4.5% year-on-year.
It is not only the EU or Germany that have been suffering from surges in energy prices, as the whole world was adversely affected by the easing of COVID-19 restrictions.
That led to high demand, which in turn sparked a hike in energy prices and shortages of key materials and labor.
Destatis revealed that German inflation also suffers from the comparison effect with 2020, when Berlin brought in a temporary sales tax cut and introduced CO2 pricing at the start of 2021.
The hike in the cost-of-living is currently a common experience across the eurozone, which is putting pressure on the European Central Bank to scale back stimulus and study raising interest rates ahead of schedule.
The European Central Bank has been insisting that the inflation spike across the 19-nation zone is transitory and being cautious about acting too soon, asserting that it would potentially stifle pandemic recovery.
"If we tightened monetary policy now, that would not add a single container ship or truck driver," Lagarde told the Sueddeutsche newspaper.
"The December inflation number could be a new record high since German reunification," Carsten Brzeski, an economist at ING Diba, said.
The economist projected that it could take Germany until the end of 2022 before headline inflation drops below 2%, hinting that it might even take until 2023.