Exclusive – Germany to hike 2022 inflation forecast to 6.1%

© Reuters. FILE PHOTO: The skyline is pictured at the end of the first day under a partial lock down of the city by authorities due to the spread of the coronavirus disease (COVID-19) in Frankfurt, Germany, March 18, 2020. REUTERS/Kai Pfaffenbach

BERLIN (Reuters) – The German government is set to hike its inflation forecast for this year to 6.1% due to the impact of the war in Ukraine, up from 3.3% it had forecast in January, according to government document seen by Reuters.

German annual inflation rose to its highest level in more than 40 years in March as prices of and oil products soared following Russia’s invasion of Ukraine and is expected to have held at that level in April as well.

Berlin, which is due to present its spring economic forecasts on Wednesday, sees consumer price growth easing to 2.8% in 2023, the document showed.

Consumer spending is expected to jump by 9.7% this year, 0.6 percentage points more than the government had forecast in its January projections. In 2023, consumer spending will grow more slowly at a rate of 4.8%, the document showed.

A source had told Reuters on Friday already that the government was set to cut in its spring forecasts its growth expectations for Europe’s biggest economy for 2022 to 2.2% from 3.6%, and saw growth picking up slightly to 2.5% in 2023.

German business morale unexpectedly rose slightly in April, following a big drop in March, as companies were less pessimistic after the economy appeared resilient following the initial shock of the war in Ukraine.