The sharp increase in oil prices caused by the Iran war has driven up consumer prices in Germany. In March it rose Inflation rate to 2.7 percent, like the Federal Statistical Office in a first estimate announced. This is the highest level since January 2024, when 2.9 percent was measured. IIn February the inflation rate was still 1.9 percent.
According to data from the federal states, prices for fuel and heating oil in particular rose. According to the information, prices in the energy sector rose particularly sharply overall – by 7.2 percent compared to March of last year. This also means the first increase in energy prices since December 2023. Prices for services, which include restaurant visits and travel, rose by 3.2 percent. Food was 0.9 percent more expensive than a year before.
According to the institute, the increase is “just the beginning”
Before the Iran war, economists had expected that inflation in Germany this year would average just above the two percent mark. The forecasts have now changed. The Bundesbank recently warned that the inflation rate is likely to “increase significantly toward three percent in the near future.” A prolonged closure of the Strait of Hormuz could put a strain on energy supplies and the inflation rate increase significantly over a longer period of time.
“This increase in the inflation rate is just the beginning,” said Friedrich Heinemann from the Leibniz Center for European Economic Research (ZEW) to the Reuters news agency. “The jump in energy prices will eat into many calculations in the coming months and lead to price increases,” he said, adding that he expects the rate to rise to three percent or more.
Fuel price at more than two euros
The US and Israel’s war against Iran has driven up oil and gas prices sharply. The reason is the extensive blockage of the Strait of Hormuz by Iran. Around a fifth of global oil consumption is transported by water. The consequences also affect drivers at gas stations in this country, where prices of more than two euros per liter of gasoline or diesel are currently charged. Gas and electricity have also become significantly more expensive for new customers.
From the point of view of economists, there is a danger that the energy pricejump will soon be extended to other areas of the economy. Rising production and transport costs could increase the prices of food, Restaurant visits and increase services. Cost increases are also expected in construction, and increased fertilizer prices are putting a strain on farmers.