Germany inflation hits 30-year high at 7.3%, growth outlook dims

German inflation surged to a record high since reunification in 1990, official figures published on Wednesday showed, amid soaring energy costs in the wake of the Russian invasion of Ukraine.
Consumer prices rose as much as 7.3% from a year earlier in March, according to the federal statics agency Destatis, up from 5.1% in February.
“Since Russia’s attack on Ukraine, the prices of natural gas and mineral oil products have markedly increased again and have had a considerable impact on the high rate of inflation,” the office said in a statement.
The figures are likely to add pressure on the European Central Bank to raise interest rates to combat surging prices.

Germany cuts growth projection
Concern over energy supplies and prices have also prompted Germany to slash its 2022 growth forecast.
The federal government’s panel of independent economic advisers has forecast that the nation’s gross domestic product (GDP) will expand only 1.8% this year.
Europe’s largest economy had hoped to begin its recovery from the coronavirus pandemic after two years in the doldrums. In November the advisory panel predicted a 4.6% jump for 2022, but that has now been cut.
“We were already having a bad time thanks to the omicron wave and now things are even more bleak,” Monika Schnitzer from the German Council of Economic Experts told DW.
If Russian energy supplies were to completely stop, that would jeopardize any post-Covid economic recovery, she added.
Last year, Germany’s GDP grew 2.8%, but in the final quarter of 2021, it shrank 0.7%, compared with the previous three-month period.

Russian ‘aggression’ gives a ‘drastically’ worse outlook
“Russia’s war of aggression against Ukraine and energy prices are drastically worsening the economic outlook,” the advisory panel said in their report.
“The high dependence on Russian energy supplies entails a considerable risk of lower economic output and even a recession with significantly higher inflation rates.”
The economic experts went on to say that “Germany should immediately do everything possible to take precautions against a suspension of Russian energy supplies and quickly end its dependence on Russian energy sources.”
The group added that “in the long term, the goal must be to ensure higher energy security, for example expanding renewable energies and diversifying energy imports.”

Germany triggers energy warning
Shortly before the economs released their forecast, Germany triggered an early warning level for natural gas supplies amid concerns that Russia could cut off deliveries unless it is paid in rubles.
German Economy Miner Robert Habeck called on businesses and individuals to try and reduce their energy consumption as much as possible as the country tries to curtail its dependence on Russian gas.