Germany is suffering from a “dramatic social crisis” fuelled by inflation, DIW economic research institute purports. Experts have appealed to the government for a EUR 5.4 billion emergency relief package to cushion the blow of rising living costs on low-income households, which studies have confirmed.
Food, housing and energy make up nearly two-thirds of consumption of households in the bottom 20 percent income threshold. By comparison, the figure is only 44.1 percent for households in the top 20 percent, shown in the study from the DIW economic research institute and the charitable group of the Protestant church, Diakonie Deutschland.
Diakonie proposed that the government create a crisis mechanism that would provide further support to households already receiving government aid at EUR 100 per month at least, for six months.
“A decrease in inflation does not mean that prices go down. Rather, we will have to count on permanently higher prices for energy and food in the coming years,” DIW president Marcel Fratzscher said.
Inflation in Germany reached 8.2 percent in June, abating slightly after hitting 8.7 percent in May, the highest level in almost 50 years, as energy and food prices have skyrocketed due to the war in Ukraine and supply bottlenecks.
The USD meanwhile surged to a 20-year high against a basket of currencies, and the euro broke below parity against the greenback after data showed that US consumer price inflation surged to a 40-year high in June.
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