Berlin, Dec. 25 (BNA): Inflation is likely to remain high for another two years as companies pass on higher input costs and in some cases inflate them, the head of the council of economists that advises the German government is quoted as saying. Saturday.
Food and energy costs have risen, pushing inflation in Germany to its fastest pace since the early 1950s, with consumer prices rising about 11.3% in November.
The Bundesbank warned that even caps on the price of gas and electricity may not be enough to bring down double-digit inflation.
“Inflation will also be a problem in 2024, and only after that we might see it back to 2%,” Monica Schnitzer, head of the so-called “Wise Men,” was quoted by the Rheinische Post as saying.
“Inflation remains high as we are seeing second-round effects, with companies passing on their high costs – and some grossly overstating.”
She said she was not worried about the wage-price spiral given the measured wage increases in the chemical and metal industries.
Workers in those industries agreed to what are likely to be sub-inflationary wage increases in return for one-time compensation payments.
However, she expressed concern about rising electricity prices, saying the government should urgently check whether it made sense to let the remaining three nuclear plants operate for two or three years longer than planned.
“It would make sense to quickly order new fuel rods now, as this should give us more security next winter,” she said.
Europe’s largest economy had planned to phase out nuclear power by the end of this year, but the government decided in October to extend the life of the remaining three plants until April given the current energy crisis. Some members of the government would like to see them live longer.
EAE