Why is inflation in Germany riding so high?

One of the biggest walkouts in decades is a sign of how frustrated millions of German workers have become.

As Brits prepare for a further hike in household bills in the coming weeks, major economies elsewhere in Europe are also feeling the heat.

On Wednesday, King Charles and the Queen Consort, Camilla, landed in Germany for a three-day state visit to Berlin, Brandenburg and Hamburg. Two days before, the country was hit with one of the largest walkouts in decades.

Charles had been expected to visit France earlier in the week as part of the same tour. However, shortly before he was set to arrive it was announced the visit was being postponed as a result of the violent clashes that engulfed France last week.

However, while the visit to Germany was given the green light, the country is not without its own internal struggles - nationwide protests gripped the country on Monday shortly before the royals began their tour, with airports and bus and train stations hit by walkouts.

Protestors demonstrate in front of 'Landungsbruecken' at the harbour during a nationwide strike called by the German trade union Verdi over a wage dispute in Hamburg, Germany, March 27, 2023. REUTERS/Fabian Bimmer
Protestors demonstrate in front of 'Landungsbruecken' at the harbour during a nationwide strike over wages ahead of King Charles' visit. (Reuters)

Monday's mass walkout (locally known as the 'mega strike') saw the country's two largest transport unions call the biggest strike in 30 years - prompting widespread travel chaos as trains, buses and flights were cancelled or delayed amid calls for better pay.

The strikes - similar to the UK - were sparked by rising inflation that is hitting ordinary Germans' pockets increasingly hard.

How high is Germany's inflation?

The cost of living crisis in the UK has seen inflation riding at double-digit levels since last summer - the worst for 40 years. In February, food inflation specifically hit a 45-year high of 18.2%.

Germany, the largest economy in Europe, is also struggling with its own pressures and unexpectedly saw inflation accelerating in February to 9.3%.

Berlin was heavily dependent on Russia for gas before the war in Ukraine and has been particularly hard hit as it scrambled for new energy sources, with inflation rates exceeding the euro-area average in recent months.


Inflation in Germany has accelerated in recent months. (Destatis.de)
Inflation in Germany has accelerated in recent months. (Destatis.de)

Prices for food and energy in particular have risen since the start of the war in Ukraine and significantly influenced inflation, the national statistics office said earlier this month.

Despite relief measures, energy prices in February were 19.1% higher on the year, while food prices were 21.8% higher, it said.

Higher prices were seen in all foods but most notably in essentials such as bread and cereals (+24.3%), fish products and seafood (+22.8% each). Very high price increases were observed for some foodstuffs with consumers having to pay 69.9% more for sugar than in February 2022, for instance.

Elke Budenbender and Federal President Frank-Walter Steinmeier with King Charles III and Camilla Queen Consort as they sign the Golden Book, in Berlin, Germany - 29 Mar 2023    Tim Rooke/Pool via REUTERS
Elke Budenbender and Federal President Frank-Walter Steinmeier with King Charles III and Camilla Queen Consort as they sign the Golden Book, in Berlin, Germany - 29 Mar 2023 Tim Rooke/Pool via REUTERS

Earlier this month, Commerzbank chief economist Joerg Kraemer told the Reuters news agency that Germany has experienced two inflation waves. The first one was driven by energy prices and the second one by material inputs, which are not ebbing. Now he expects a third inflation wave, driven by higher wages.

"The labour market is running hot and we will see higher wages," Carsten Brzeski, global head of macro at ING, also told Reuters.

For millions of workers, it has been a painful adjustment as costs rise after years of fairly stable prices.

"It is a matter of survival for many thousands of employees to get a considerable pay rise," Frank Werneke, head of the Verdi labour union, told Bild am Sonntag.