At the end of last year, Germany’s inflation rate was still close to its highest level in decades, forcing the government to pledge assistance to poor families as energy prices continued to soar at a double-digit rate.

According to the harmonized consumer price index released on Thursday, the annual price growth rate in Germany in December was 5.7%. This is a slight decrease from the 6% in November, which is the highest level since the country’s reunification in the early 1990s.

Energy prices in Germany have risen by 18.3% over the same period last year.

German Finance Minister Christian Lindner said that the new government is considering providing financial assistance to offset the rising heating costs of poor families this winter.

“We have to do something,” Lindner said at the Liberal Democratic Party meeting in Stuttgart. “I promise that with my existing means, we will provide such solidarity-based support to those who are particularly affected.”

France, Spain and Italy Already promised Take similar actions.

Spiral price This is a sensitive topic in Germany. Hyperinflation in the 1920s and 1940s destroyed most people’s savings, and Germany’s attitude towards money still bothers them.

Economists expect that as the country’s temporary sales tax cuts due to the pandemic disappear from the data, Germany’s inflation will subside this year. They estimate that this should automatically reduce overall price growth in January by about 1 percentage point.

“Due to many special factors and supply-demand imbalances that will weaken at least during 2022, we expect the inflation rate to drop to slightly below 2% by the end of the year,” said Jörg Zeuner, Chief Economist of Joint Investment.

However, on Christmas Eve, the wholesale price of natural gas in Europe almost doubled, setting a record high. Jumped again This week after Russia’s supply slowed down. Bottlenecks in the global supply chain have also caused delays and higher costs for manufacturers, pushing up the prices of many consumer products.

Due to increased demand from foreign customers, new orders in November exceeded economists’ expectations, increasing by 3.7%, rebounding from the decline in the previous month, and the record order backlog of German manufacturers showed no signs of easing.

Due to the increasing shortage of workers and the government’s commitment to increase the minimum wage by a quarter to 12 euros per hour, the improvement in the country’s labor market may increase upward pressure on costs.

The German employment agency said this week that vacancies increased by 213,000 to 794,000 last year. Employment website Indeed stated that the number of German job vacancies it advertises has increased by nearly 50% from pre-pandemic levels.

“Inflation is unlikely to fall straight from now on,” points out Carsten Brzeski, head of macro research at ING, and nearly half of the 92 largest components of the German inflation basket have price increases of 4% or more in December—more than a year. The top 10%.

Food prices rose by 6%, service prices rose by 3.1%, and rents rose by 1.4%.

In the past year, Germany’s average inflation rate was 3.1%, the highest level since 1993 and higher than 0.5% the year before the pandemic caused a deep recession. The Bundesbank recently raised its inflation forecast for 2022 from 1.8% to 3.6%.

Eurozone inflation data is expected to be released on Friday from 4.9% in November to 4.7% in December. But this is still close to a 13-year high-and more than double the ECB’s 2% target.