Investing Pioneer – November 30, 2022
Inflation in Germany is still going strong. The German food CPI jumped to 21% (YoY) for November, making it the highest food price inflation reading yet. Looking at other major European countries, Spain and Italy’s reading is 16% and 14% respectively. Markedly lower, though still high.
Despite this, the overall official CPI inflation statistic for Germany eased slightly in October, from 10.4 to 10% (according to the Federal Statistical Office of Germany).
This decrease was due to lower energy costs, falling from 43% (YoY) for the month of October, to 38.4% (YoY) for November.
It remains a question of whether energy prices will continue to drop. On the global scale, continuous signaling by OPEC+ to cut production does not bode well.
Furthermore, weather forecasting suggests Europe could experience a colder-than-average winter, further pressuring price rises.
For Germany (and most nations), a continued shift from discretionary to mandatory spending is occurring, and indeed this trend may worsen. According to the latest statistics, Germans are getting poorer. Nominal earnings rose by 2.3% in the third quarter (on a year-over-year basis), while inflation rose about triple that in the same span.
This represents the largest real wage drop for Germany in many decades.
In light of this, multiple protests have taken place. In October, tens of thousands of protesters (across several cities in Germany) lined the streets, demanding resolution and assistance with living expenses.
How long this will continue, and how severe it could get, remains to be seen.