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Inflation in Germany Expected to Remain High for Several More Months

Germany's inflation rate is expected to remain high for the foreseeable future, according to a survey conducted by the BDI industry association for Reuters.

Flag of Germany
Flag of Germany

Inflation slowed slightly to 11.3% in November, down from 11.6% the previous month, but is now being driven by various factors rather than just energy costs.

BDI President Siegfried Russwurm stated that it is unlikely that the European Central Bank's target of 2% inflation will be achieved until the middle of the decade. This will only be possible if monetary policy is effective. The ECB has already raised interest rates by 2.5 percentage points since July to curb inflation, and the BDI anticipates that additional measures will be taken. These measures are expected to dampen investment activity.

Inflation Expected to Remain High, with Slowdown Not Anticipated Until 2023

The heads of the ZDH association for skilled trade and the DIHK chambers of industry and commerce also do not foresee a decrease in inflation shortly. ZDH Secretary General Holger Schwannecke predicted that a noticeable slowdown in price increases is likely in summer 2023, and even then, the price level will remain high. DIHK President Peter Adrian believes that the ECB's interest rate hikes began too late and, as a result, must now be raised more quickly. This is making corporate financing more complex and is an additional burden for businesses.