Germany’s inflation rate climbed to 1.7 percent in March, the Federal Statistical Office (Destatis) said on Tuesday.
Between July and December last year, the inflation rate in Germany was at or below zero before jumping to 1.0 percent in January and has been increasing since, according to Destatis.
While prices of food and services in Germany each rose by 1.6 percent in March, prices for household energy and motor fuels even increased by 4.8 percent year-on-year, according to Destatis.
The CO2 pricing scheme for Germany’s heating and transport sectors that entered into effect in 2021 was driving up prices. Initially, the price per carbon ton was set at 25 euros (around 29 U.S. dollars).
The Kiel Institute for the World Economy (IfW Kiel) already noted in its economic outlook published in mid-March that the German inflation rate was expected to rise significantly to 2.3 percent in 2021, with monthly rates exceeding three percent in the final quarter of the year.
According to IfW Kiel, the German government’s climate package and the rise in value-added tax after the temporary reduction in the second half of last year would contribute to rising inflation rates.