3.8 percent inflation: Less for the same money

In July, the inflation rate in Germany reached its highest level for at least 25 years: 3.8 percent - that has not been the case since 1996 when the harmonized measurement of consumer prices was introduced in Europe.

Since then, the rate of price increases has always been lower than in the time when Helmut Kohl was Federal Chancellor and Berti Vogt's national coach.

So far, wages have not increased with it

The new record sounds unsettling.

After all, inflation means nothing more than that citizens can buy less for the same money.

The price level is rising, while wages and salaries in Germany have not increased to the same extent, at least so far.

How dangerous is that

What can be observed at the moment cannot be compared with the hyperinflation in Germany during the 1920s.

Nevertheless, Bundesbank President Jens Weidmann expects the monthly inflation rate to rise further by the end of the year in the direction of five percent.

That can be painful, especially when savers park their money in non-interest-bearing checking accounts.

You should think about alternatives.

Restaurateurs and retailers are raising their prices

Energy prices alone are no longer driving up the cost of living.

In July, the inflation rate was increased again due to a special effect, because now prices with the higher value added tax from this year are compared with those from last year with a lower tax rate.

But even beyond this effect, the prices for many goods rise because there are bottlenecks.

And restaurateurs and retailers are trying to enforce price increases to compensate for their Corona failures.

This is not unexpected: Already a historical epidemic, the plague in Leipzig in 1611, is reported, after all the horrors the price of beer in the inns has also risen.

Many effects are currently limited in time because they are related to the recovery of the economy.

Whether this will ultimately lead to more inflation in the long run will also depend on whether the European Central Bank has the courage and strength to counteract this at the right moment.