Business

German consumer prices 5 percent above EU average

The level of consumer prices in
Germany is 5 percent above the European Union (EU) average, according to
compiled figures published on Friday by the Federal Statistical Office.

According to Eurostat data published by the Wiesbaden-based government
agency, Germany ranked in the midfield of the countries assessed, ahead of
Italy (1.1 percent above average) and Spain (7.7 percent below average), but
still well behind Denmark (41.5 percent above average), Luxemburg (26.9
percent above average) and Sweden (25.4 percent above average).

The highest price levels were measured in Iceland and Switzerland at 66
percent and 59 percent above the EU average, respectively. By contrast, the
cost of living was found to be relatively low in the Czech Republic (31
percent below average), Poland (43.8 percent below average) and Bulgaria
(51.6 percent below average).

The findings underlined the persistence of stark inequalities with regards
to consumer prices in the EU in spite of some progress towards economic
convergence between the richer and poorer members of the bloc.

In part, the remaining gap in consumer prices owed to different levels of
taxation imposed by member on goods such as tobacco and alcohol, as well as
the differential cost of housing.

For example, rents, wine, beer and cigarettes in Bulgaria, the bottom-
ranked EU country, were all around 50 percent cheaper than the member state
average.

By contrast, German tourists who spent one euro in a high-cost European
Economic Area (EEA) country like Switzerland only received goods and services
which would be worth 0.71 cents in their home country in return.

Speaking to Xinhua on Friday, Stefan Kooths at Kiel Institute for the
World Economy predicted that German consumer prices would rise by “around two
percent” in the course of 2018 as well as 2019.

“This is due to the strong economy. Demand for production capacities in
many areas is far above average, for example in the construction industry,
which is driving up prices,” Kooths said.

Referring to a series of tax cuts and increases in benefits that the
German government is planning, Kooths expects “good situation on the labor
market where employees can expect strong wage increases”.