German experts forecast highest inflation in 30 years

German economists at a leading institute expect consumer prices to rise by 3 per cent this year, the highest increase in almost 30 years, reported dpa.

For next year, the economists at Munich's ifo institute expect an inflation rate of between 2 and 2.5 per cent, the organization announced on Wednesday. This would still be considerably higher than the average over the past decade.

According to ifo economists, the comparatively high inflation this year is largely due to measures taken during the coronavirus crisis.

Last year, the government temporarily reduced consumption tax and energy prices were down. This year, there is no discount on consumption tax and energy prices are rising.

The last time the Federal Statistical Office calculated an inflation rate of over 3 per cent was in 1993, when prices rose by 4.5 per cent.

Ifo indicated that other factors could drive prices higher than forecast. Consumers' pent-up demand after the pandemic could be stronger than previously assumed, while rising prices for raw materials and supply bottlenecks could all push prices higher.