German inflation to remain high until end of 2024
Inflation in Europe's largest economy is here to stay.
The inflation in Germany is likely to remain high until the end of 2024 as the country's as companies spill their rising costs onto customers, the government's senior economic aide warns.
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"Inflation will also be an issue in 2024, and only thereafter will we maybe see it returning to 2%," Monika Schnitzer, who heads the council of economists that advises the German government said.
"Inflation is remaining high because we are seeing second round effects, with companies passing on their higher costs - and some significantly exaggerating," she added, according to Rheinische Post newspaper.
In November, Germany's inflation stood at around 11.3% running high at its fastest pace since the early 1950s. Schnitzer stated she was concerned about the high electricity prices, saying that it's urgent that the government checks whether it would make sense to let the remaining 3 nuclear plants run for 2 to 3 years beyond planned.
"It would make sense to quickly order new fuel rods now, that would give us more security next winter," she added.
In October, Germany decided to extend the lifespans of the remaining three nuclear plants until April to accommodate to the energy crisis in the country.
On November 29, Qatar agreed to supply Germany with two million tons of liquefied natural gas (LNG) a year for at least 15 years, as Germany attempts to replace all energy imports by mid-2024 as part of a Russia isolation policy. This deal, however, has been criticized as it only replaces 3% of the total need for LNG in Germany.
In the publicly-announced agreement between Qatar and Germany, the latter will receive two million tonnes of LNG at Brunsbüttel, which will be delivered, according to Qatar's Energy Minister Saad Sharida al-Kaabi, by American energy firm ConocoPhilipps.
German Economy Minister Robert Habeck said the 15-year term of the deal was "great".
But the head of energy analytics, Andreas Schroeder, considered that the starting date of 2026 was late, as Germany needed LNG for 2023 and 2024.
"If German players do not secure sufficient volumes at an OK price for 2023, they will have to revert to spot LNG markets, and expose themselves to global price volatility," he pointed out.
On that note, German MP Kaus Ernst commented on the Qatar-Germany LNG agreement saying that the deal does not offer real alternatives to Russian gas.