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The biggest industrial action in decades is set to begin today in Germany in the transport sector as workers go on strike in response to soaring inflation, paralyzing Europe’s biggest economy.
Reuters cited unions as saying wages needed to be raised as this was “a matter of survival” for workers, while employers called the strike “completely excessive”.
This doesn’t bode well for further developments as unions have asked for pay rises of between 10.5% and 12%.
Inflation in Germany hit 9.3% last month, rising more than expected on both an annual and a monthly basis. Energy inflation was even steeper, with prices up by 19.2% in February compared with a year earlier. Food inflation beat even that, clocking in at 21.8% in February compared with a year earlier.
The outlook is not particularly optimistic, either.
"Although the inflation rate may fall in the coming months because energy prices are unlikely to rise as strongly as they did in spring 2022, this does not mean that inflation is over," Ralph Solveen, economic researcher at Commerzbank, told Reuters.
At the same time, inflation may remain high if energy costs remain high. This might well happen as China’s economy returns to its normal rate of operation, pushing energy—and specifically LNG demand—higher.
This prospect is already of concern for those in charge of Germany’s energy security. The head of the Federal Networks Agency, the country’s energy market regulator, warned earlier this month that Germany risks gas shortages next winter. One reason for the shortages was China’s rebound after the pandemic lockdowns. The other was the end of Russian pipeline gas supply.
As transport workers prepare to strike, employers have warned that higher pay for workers will translate into higher prices for the services their companies provide, effectively contributing to inflation.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com