In the event of restrictions on imports of energy resources from Russia, inflation in Germany could reach 10%.
“We forecast that inflation will reach 7-8% this year. In the case of more limited energy imports, it can reach or even exceed 10%. We must be prepared for the fact that we may have inflation that has not been observed since the 1970s, “said Karl von Rohr, vice president of Germany’s largest financial institution, Deutsche Bank.
He recalled that Deutsche Bank has been warning about higher inflation rates for a long time. In this regard, von Rohr called for an increase in interest rates. “We believe that raising the interest rate is essential in the near future so that inflation expectations are not set at a high level,” von Rohr said.
In the event of limited energy imports, the German economy could face a recession. “If there are problems with the supply of oil and gas, there is already a risk of stagnation or even contraction of the economy – while at the same time there is a high rate of price growth. However, there is one thing we must not lose sight of Germany has strong companies and a strong economy, “said the vice president of Deutsche Bank.
In March, inflation in Germany reached a record 7.3%. The last time inflation reached this level was in the autumn of 1981.
Electricity prices will rise
The situation in Ukraine has led to a significant increase in electricity prices for private consumers in Germany this year. This was announced by DPA, citing data from the online platform Verivox.
The country’s electricity suppliers, which cover 13 million households, have already announced tariff increases of 19.5% in April, May, and June. The growth of gas prices will average 42.3%. “All gas suppliers will face historically high purchase prices,” Verivox said.
According to the online platform, if a household consumed around 4,000 kWh per year and paid € 1,171 for electricity on an annual basis, this amount has now reached € 1,737. The situation with gas is even worse. If a household with a consumption of 20,000 kWh in April last year paid 1184 EUR on an annual basis, now it is 2787 EUR, which means an increase of 135%.
Earlier, German Vice-Chancellor, Minister of Economy and Climate Protection Robert Habeck announced the introduction of an emergency plan in case of interruption of energy supplies from Russia. The plan envisages three stages, now we are talking about the first of them. Agreements have been reached on an alternative to supplies from Russia, and Germany seems to have the necessary infrastructure for this.
The bad news about the price of bread
The increase in the price of flour may lead to a 20% increase in the price of bread in Georgian stores in May. “At the end of March, the price of 50 kg of bread flour imported from Russia was 65-70 GEL ($ 21-23). Then the price increased and reached 75 GEL ($ 24). The price of local flour is 80 GEL ($ 26). If we add to this the tariffs for electricity, natural gas, water, salaries, and sales costs, then everything will focus on the price. The issue of price revision will be on the agenda, “said Malhaz Dolidze, head of the Union of Bread Producers in Georgia.
Currently, the average price of a loaf of bread in Georgia is 1 GEL ($ 0.3). The price varies depending on the weight and type of bread.
Georgia consumes up to 650,000 tons of wheat a year. Domestic production covers this volume by only 15%, the rest is imports, over 90% of which falls on the Russian Federation. Georgian Environment and Agriculture Minister Otar Shamugiya said authorities plan to increase at least half of the amount consumed in the country in the coming years.
