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Frankfurt / Main (dpa) - VAT has been at the old level since the beginning of the year, and a CO2 tax is also due for transport and heating.

After the mini inflation of 0.5 percent in the past year, do people in Germany now have to adjust to rising prices across the board?

How will inflation develop in 2021?

Economists expect a rather moderate increase.

The reasons given by economists at Deutsche Bank include the recession and wage and purchasing reluctance.

They expect consumer prices to rise by 1.4 percent for the year as a whole, primarily because of higher energy prices, but also because of the return of VAT rates to the previous level of 7 and 19 percent.

The German Institute for Economic Research (DIW) anticipates an annual inflation rate of 1.6 percent.

The Kiel Institute for the World Economy (IfW) expects 2.6 percent.

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How is the inflation rate calculated?

Statistical state offices and the Wiesbaden Federal Office record more than 300,000 individual prices of goods and services each month in a representative manner, always using the same scheme.

The prices of around 600 types of goods, which make up the so-called shopping basket, are collected.

On this basis, statisticians calculate the development of inflation.

Around 70 percent of the goods and services contained in the shopping cart are subject to VAT.

Exceptions are, among other things, net rents.

Where will consumers especially feel the effects of rising prices?

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Heating oil and natural gas in particular are likely to become more expensive, and drivers will also notice this at the petrol station.

Not only does the return to the old VAT rates have an impact here, but also the CO2 tax of 25 euros per tonne of carbon dioxide emitted, which is created when diesel and petrol, heating oil and natural gas are burned.

Both measures together burden the fuel price according to calculations by the Mineralölwirtschaftsverband (mineral oil industry association) with 10 to 11 cents per liter.

How much of this the customer has to pay is decided by the competition.

Is daily shopping getting more expensive now?

The trade association HDE does not expect prices to rise across the board.

The competition is too great for this and customers are too price-sensitive.

Michael Gerling, managing director of the Cologne retail research institute EHI, does not expect a wave of price increases either: "The higher value added tax is partly offset by discount campaigns in drugstores and in the grocery store."

In stores that are currently not allowed to open, the warehouses are also full.

"The pressure is high and the price is always an argument to get consumers to buy," says Gerling.

"Competition and consumer sentiment are not such that large price increases are possible."

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Have consumers even benefited from the VAT cut?

In order to cushion the economic consequences of the Corona crisis and to stimulate consumption, the federal government reduced the VAT rate for six months from July 1, 2020: from 19 to 16 percent and from 7 to 5 percent.

Retailers and service providers were free to decide whether and how they would pass this on to consumers.

According to the Bundesbank, people benefited from the tax cut especially on food and industrial goods.

What has the reduction in tax rates done for the economy?

According to the Ifo Institute, hardly anything.

The declared aim of the federal government was to induce citizens to make larger purchases.

"This has not been achieved, as two surveys suggest," argue the economic researchers.

The reduction in VAT brought 6.3 billion euros in additional consumption.

The estimated tax shortfall, however, is 20 billion euros.

From a retailer's point of view, too, the lower tax rates have brought relatively little.

"The measure did not stimulate the trade overall, but caused a lot of effort," says EHI representative Gerling.

What are the consequences of the rising national debt?

Aid packages worth billions and falling tax revenues in the Corona crisis are a burden on public budgets.

Economists at Deutsche Bank therefore do not rule out that the prices for some public services could soon rise: "A look into the past shows that even in bad financial times there have been, in some cases, sharp increases in administered prices."

For example, garbage disposal, water supply and disposal, museum or theater visits could become more expensive.

Administrative or kindergarten fees could also rise.

© dpa-infocom, dpa: 210106-99-919041 / 2

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Federal Statistical Office on Inflation in Germany

Long series of consumer price index Germany

Federal Office on the effects of the VAT reduction June 15, 2020

Ifo Institute for VAT Reduction and Consumption

Eurostat on inflation in the euro area

ECB explanations on inflation

ECB video on inflation

Federal Statistical Office on Inflation December and 2020 as a whole