After slowing for a few months in June and July, inflation in Germany rose to 10 percent in September - the highest rate seen in the federal republic since 1951. Experts have said that Europe’s biggest economy is heading towards a recession. 

Inflation in Germany at highest rate since 1951

New figures released by the Federal Statistical Office (Destatis) show that consumer prices rose by 10 percent in September 2022 compared to the same month of the previous year. The increase is the highest recorded in the federal republic since the autumn of 1951. 

Once again, the price rises are primarily being driven by the rising cost of energy and food. According to Destatis, energy prices rose by 43,9 percent in September compared to the previous year, while food prices rose 18,7 percent year on year. On the other hand, residential rents rose by an average of 1,7 percent compared the previous year, way below the average inflation rate. 

Destatis explained that the inflation rate was “presumably” influenced, among other things, by supply chain issues and the end of several inflation-dampening measures like the 9-euro ticket and the fuel tax discount. 

Germany heading for recession, think tanks say

The inflation announcement came after a leading group of think tanks forecast on Thursday that Germany was heading into a recession, driven primarily by the huge increase in energy prices. In a joint statement, the think tanks said that inflation was likely to rise in the coming months, averaging out at 8,4 percent in 2022, and hitting 8,8 percent in 2023. 

Torsten Schmidt, head of economic research at the think tank RWI, told a press conference that the high cost of energy was “driving Germany towards recession” and that the economy would shrink in the second half of 2022 “before moving into a recovery phase early next year.” Schmit predicted that German GDP would shrink by 0,4 percent in 2023, before bouncing back in 2024.