Tuesday, August 13, 2013

Strange Inflation Scare

The inflation rate in Germany was at 1.9 % in July, according to destatis, the primary reason seems to be bad weather which has caused less overall harvest, which in turn has driven up the prices for food by 5.7 %. So, nothing to worry about? Wrong! One, Germans are always worried, we are somewhat famous for that, and two the media just discovered that the interest rate of savings accounts is below inflation; and therefore old people and kids are actually losing money. They have just found the real interest rate, I guess, since savings accounts have actually never been a good investment. In fact "savers" have been most likely losing money since 2003, if they chose this non-form of investment. Even in the most favorable of circumstances savings account interest barely reaches the inflation rate.

But, why should that stop the media from reporting that the "Normalb├╝rger" normal citizen is losing money; and thereby somehow paying for the South? Zeit thinks the development is "dramatic" and the inflation rate is at the ECB target "significant". "It is the threshold at which the ECB sees price stability ENDANGERED". According to n-tv there is "talk about creeping confiscation", by the evil weather god, I guess. Spiegel's heading is:

Inflation in Germany: the prices for groceries are increasing massively.
Yeah, they do mention the weather (the others do, too), as a possible cause somewhere in the middle of the article, but since nobody actually seems to read more than the title and the first few sentences, they made their forum users, who typically aren't the smartest on a good day, go ballistic.

1.9 % inflation driven primarily by food and energy. Come on! There are reasons why core inflation does not include these, the ECB is neither a weather god nor does it own a power plant able to produce an infinite amount of electricity. But, inflation panic sells better than sex in Germany: more clicks, more likes, more moneyz!

Update: "prices in supermarkets are exploding" acoording to Bild. There is "INFLATION-DANGER" they say, I is sooo scared. Luckily, there seems to be - on any given topic - at least one sane newspaper left in Germany: TAZ actually explains the causes calmly.

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