TOP News

Money: Bundesbank: Inflation could reach the climax in December

Liz Truss plans to hike income tax thresholds as part of rescue package to help families

  Liz Truss plans to hike income tax thresholds as part of rescue package to help families The Foreign Secretary will also consider the 'nuclear option' of temporarily cutting the headline rate of VAT by 5 per cent, at an estimated cost of £30billion. But sources said the leadership frontrunner has all but ruled out adding to the universal £400 energy bill discount agreed by her rival Rishi Sunak earlier this year.Instead, direct support is likely to focus on targeted measures, such as increasing the winter fuel allowance for pensioners and helping those on universal credit.

The European Central Bank does not want to be put off by the cloudy economic outlets in its fight against the record-high inflation according to the words of Bundesbank boss Joachim Nagel. It cannot be ruled out that there will be lower growth rates or a recession, said the ECB council member on Deutschlandfunk. "But essentially it is about stable prices in the end are much more important for medium -term, long -term growth and [a] good economic outlook for the euro area.» You may have to bridge a dry spell. At the moment, however, it looks as if the decline in economic output could not be as strong.

Passanten mit Einkaufstüten gehen bei Nieselwetter durch die Fußgängerzone in der Innenstadt von München. © Peter Kneffel/dpa Passers -by with shopping bags go through the pedestrian zone in the city center of Munich in drizzle weather.

The ECB had the key interest rates by 0.75 points on Thursday and thus raised more clearly than ever. The background is the rapid increase in consumer prices, which is mainly driven by the Russian war in Ukraine and the aftermath of pandemic. According to Nagel, Nagel assumes that the price growth accelerates and inflation in December could reach its peak with more than 10 percent. Also for 2023, the annual taxation will probably be significantly too high with more than 6 percent, he said. The ECB actually strives for an inflation rate of 2 percent.

What can households do to cope with soaring inflation?

  What can households do to cope with soaring inflation? What lies ahead and what can be done to mitigate price rises and keep households afloat?Combined with eye-watering gas and electricity tariff increases, consumers are facing soaring costs at every turn.

Nagel said there are signs that inflation is broad in many areas. Therefore, monetary policy must now "grab". ECB President Christine Lagarde has also promised further interest rate increases. At the same time, the Bundesbank President was confident that the tariff partners “show their responsibility” during the upcoming wage negotiations.

The currency keepers of the ECB are currently in a dilemma: they have to tighten monetary policy if they want to combat inflation. However, money is withdrawn from the economy, which dampens growth. At the same time, there is concern that rising interest rates are a burden for highly indebted states such as Italy if they want to borrow fresh money from investors.

survey reveals gaps in financial knowledge .
The inflation has been vigorous in the purchasing power of people in Germany for months - but about a quarter of the population do not know what a rate of inflation is actually. This is a result of a representative survey on behalf of the Federal Association of German Banks (BDB). © Hauke ​​-Christian Dittrich/dpa The inflation has been vigorous in the purchasing power of people in Germany for months - but about a quarter of the population do not know what an inflation rate actually is.

See also