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Inflation in Germany is predicted to remain elevated for an additional two years, a senior authorities adviser warned Saturday.
“Inflation can even be a problem in 2024, and solely thereafter will we perhaps see it returning to 2%,” Monika Schnitzer, chair of the German Council of Financial Specialists, informed the Rheinische Submit newspaper.
Schnitzer mentioned inflation would stay excessive due to so-called second-round results as producers cross on increased prices to shoppers and companies.
She accused some companies of considerably exaggerating their worth rises.
Her feedback distinction with a report by the Munich-based Ifo institute final week that predicted that inflation would fall to six.4% in 2023.
Ifo additionally mentioned a predicted recession in Germany can be milder than beforehand thought, with progress shrinking simply 0.1% in comparison with an earlier forecast of a 0.3% contraction.
No worry of wage-price spiral
Within the interview with the Rheinische Submit, Schnitzer mentioned she was not involved a few wage-price spiral because of measured wage negotiations.
In key German industrial sectors resembling chemical compounds and metals, unions have agreed to below-inflation pay will increase in return for one-off compensation funds.
Inflation in Germany hit a document annual charge of 10.4% in October, in line with the official Destatis statistics company. Final month, the inflation charge fell barely to 10%.
Rising costs, which started because the economic system emerged from the coronavirus pandemic, have been additional stoked by Russia’s invasion of Ukraine.
Family power costs have been up by over half in November in contrast with the identical interval final 12 months, spurred by hovering pure gasoline costs. Meals costs have risen by greater than a fifth over the previous 12 months.
Excluding meals and power, inflation was extra like 5% in November, in line with Destatis.
‘Power worth surcharge wanted’
Schnitzer known as for a short lived solidarity surcharge or “Soli” to be launched subsequent 12 months to finance the power worth caps, which search to cut back the affect of hovering electrical energy and heating payments.
The proposed levy can be just like the solidarity surcharge paid by German taxpayers to pay for reunification.
“An ‘power soli’ is sensible: It acknowledges that the nation is getting poorer and that sturdy shoulders must carry extra of the burden than weaker ones,” Schnitzer mentioned.
The non permanent levy may herald an extra €12-13 billion ($12.8-13.8 billion) in tax income, she mentioned.
With power costs anticipated to stay excessive, Schnitzer additionally known as on Chancellor Olaf Scholz’s authorities to increase the lifetime of three nuclear energy crops for an extra three years.
“From an financial standpoint, it could make sense to order new gas rods shortly. That may give us extra safety subsequent winter,” she mentioned.
Berlin has reluctantly agreed to increase the lifetime of the final getting old nuclear energy stations till April due to the power disaster.
They have been set to be decommissioned inside days as a part of a decadeslong coverage to section out nuclear energy.
Scholz ought to push again pension age
Schnitzer additionally known as for the retirement age to be raised to 69 from the present 66, due to the shortage of staff to exchange the growing variety of pensioners.
“Issues can’t go on like this with pensions,” she informed the Rheinische Submit. “The Council of Financial Specialists proposes that eight months of every further 12 months of life must be spent in work and 4 months in retirement. Then we might attain retirement at 68 in 2046 and retirement at 69 in 2061.”
Schnitzer additionally urged the federal government to cease permitting staff to retire at 63 if they’d paid sufficient social safety contributions.
The pension age is scheduled to rise to 67 by 2031.
mm/dj (dpa, Reuters)
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