Data from the German Federal Statistics Office in recent months have repeatedly shown that soaring energy prices are the main driver of rising inflation in Germany. Some German companies and hospitals are at risk of bankruptcy due to high energy prices, while ordinary people choose to drive to their neighbouring countries just to add cheaper gasoline.
Founded in 1928, Hackler, a well-known local toilet paper and kitchen paper manufacturer, announced its bankruptcy and reorganization process in early September. The makers of toilet paper, which was wildly hoarded by Germans at the beginning of the outbreak, have now been forced to declare bankruptcy because of rising energy prices.
Rising rising energy costs have also left some German hospitals in trouble. Michael Jacob, general manager of the Brandenburg Hospital Association, said sharply rising energy costs are leaving hospitals facing increasing problems and possibly bankruptcy, with energy costs expected to rise 45 percent this year and 140 percent next year.
Jacob said some hospital could even declare bankruptcy this year if the situation continues. In addition to rising energy prices, medical products and services have become more expensive, but hospitals cannot simply pass on increased costs.
As the last rescue plan, including refueling subsidies, expired in the end of August, many German car owners chose to go to neighboring countries to reduce the cost of using their cars. German media have calculated 50 to 60 euro cents cheaper in Poland, 50 euro cents cheaper for the Czech Republic and 40 to 45 euro cents cheaper in France, according to Germany.
Germany's annualized inflation rebounded to 7.9 per cent in August, unchanged from May and the highest since the oil crisis of the 1970s and reunification.
Tes Petersen, an economist at the Bertelsmann Foundation in Germany, recently told Xinhua that high inflation means that consumers have less spending power, and companies will reduce their production and investment. There is a risk of stagflation in the German economy as prices rise and production decreases.
German Chancellor Joel Scholtz announced his third rescue plan since mid-February at 65 billion euros. But economists predict that Germany will still remain out of recession.
Jg Krammer, chief economist at Commerzbank, and Karsten Brzesky, an economist at ING, said the latest bailout is likely to be insufficient to stop the German economy from falling into recession.
The German economy is expected to shrink for three consecutive quarters from the current quarter, according to a recent Reuters survey of economists. The German economy in recession would have a knock-on effect across Europe.
