German Inflation Hits 3.3 Percent in September as Merz Sticks to Austerity Course

Germany's inflation rate rose to 3.3 percent in September, up 0.4 percentage points and the highest level in nearly three years, according to preliminary calculations by the Statistisches Bundesamt. The last time inflation was higher was December 2023, when prices climbed 3.7 percent. The September increase is attributed above all to high prices for petrol, diesel and gas, a consequence of the Iran war. Real wages have stagnated at their 2019 level since that year. Despite this, Chancellor Merz is holding to his austerity course, and the week's developments include a more expensive Deutschlandticket, higher care contributions for people without children, and the Volkswagen leadership's cancellation of collective bargaining agreements. The commentary argues that a thinking error underlies Merz's savings policy, one familiar to every economics student.