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Date: 2024-05-21 Page is: DBtxt001.php txt00023819
INFLATION
2022 INFLATION IN GERMANY

The 2022 inflation in Germany is dangerously high


Inflation in Germany 1998 to 2022

Original article:
Peter Burgess COMMENTARY
The recent (2022) inflation in Germany is dangerously high ... explained mainly by Russian invasion of Ukraine

For the Eurozone as a whole, it is energy that has been the main driver of an increasing inflation rate.

Much of the US right wing political class in the USA likes to blame President Biden and the Democrats for inflation, without any reference to the inflation that is impacting other industrial zones and especially Europe.

My own analysis has suggested for some time that it is energy that is the core inflation driver, and especially the embedded profit that exists in all energy products and then gets embedded as cost in everything else.

Europe has taken some steps to discourage energy companies from taking advantage of shortage and engaging in price gouging ... but no such initiative is one the agenda in the United States. The imposition of excess profits taxes is perhaps the best way to discourage aggressive price inflation when there are systemic shortages in the supply chains. Such systemic shortages have become endemic during the Covid pandemic and its related production disruptions.

The inflation in the past two years has almost nothing in common with the inflation that was experienced in the 1970s. There is much more embedded profit in the economic system now (December 2022) than there was in the several years after 1973 and the OPEC driven oil shock. The global economy has adjusted to a crude oil price in the range of $60 to $80 a barrel, and oil companies have substantial profits in this price range. Courtesy of surprisingly strong demand energy prices have been substantially higher than this and profits and energy stock prices have been at very elevated levels. At the same time a variety of supply chain disruptions have created unusual shortages for a variety of consumer goods including food, and companies have taken full advantage of this to raise prices. It is only at consumer facing businesses like the local supermarket that margins have narrowed and they struggle to maintain what are usually quite modest profit margins.
Peter Burgess

Components of Inflation in Eurozone 2012 to 2022




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