Germany has enjoyed a privileged position as one of the leading figures of the European Union. The dark days of the Weimar Republic and hyperinflation seemed long gone as the German economy became one of the largest in the world. The conflict in Ukraine now threatens to spark the return of hyperinflation across Germany and central Europe.
On April 4, the German Retail Association warned that consumers should prepare for an increase in the costs of everyday goods.
The inflation rate among the nineteen nations in Europe that use the Euro has risen to 7.5%. The cost of living has risen uncontrollably since the war began in Ukraine.
The increase from January’s 5.1% to February’s 7.3%, according to the federal statistics office Destatis, reflects the impact of Russia’s invasion of Ukraine, which has caused oil and gas prices to skyrocket.
The German supermarket Aldi explained it had seen the first in a series of price hikes over the last fortnight.
“Since the start of the Ukraine war, there have been jumps in purchase prices that we have never seen before,” said Florian Scholbeck, head of communications at Aldi.
The latest price increases will see everyday grocery items such as sausage and butter increase by anywhere from 20 to 50%. Prices in Russia have already risen, with France and Germany forecasting problems for vulnerable consumers.
The sanctions against Russian companies have caused shortages worldwide, leading to rising prices.
On March 31, U.S. President Joe Biden announced the release of 1 million barrels of oil per day for six months from the United States’ strategic petroleum reserve. This release is part of a long-term plan to limit the impact caused by the loss of Russian resources.
However, the effects of the war in Ukraine stretch beyond the impact of natural gas and oil. Russia and Ukraine are among the top five producers of wheat and cooking oil. Now, German grocery stores are having to limit food products like bread, flour, and cooking oil due to consumers purchasing the items in a state of panic.
Still, Joachim Rukwied, a German farmer and the president of the farming association, reassured the country that product shortages would not be an issue until 2023.
If the war in Ukraine prolongs, it will threaten the supply chain that has been in a difficult situation since the start of the COVID-19 pandemic in 2020. Rising prices and the prospect of food shortages will test the patience of Europe.