26 December 2022 | Other

Inflation to stay high for two years

On Saturday, the head of the German government's council of economists said inflation could persist for the next two years. This is due to the fact that companies are moving towards a higher level of production costs, and even often exceeding it. 

According to the Rheinische Post’s article, Council head Monika Schnitzer warned of further inflationary pressures in 2024. Schnitzer also explained that a return to the 2% level will only be possible after that timeframe.

According to the chief economic expert, inflation may linger for a long time, as experts observe the effect of the second circle. In this economic phenomenon, companies tend to shift their higher costs to consumers.

At the same time, Schnitzer does not consider wage and price increases a threat, given the moderate increase in earnings in the chemical and metal industries. She is concerned, however, about high electricity prices. The head said that the government should urgently examine whether it makes sense to extend the operation of the three remaining nuclear power plants for two or three years longer than planned.

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