Monday, January 30, 2017

Inflation and interest rates: a rise in prices, interest rates, unfortunately, not – MIRROR ONLINE

no longer melted So fast the money of the savers in a long time. Inflation in Germany rose in January to 1.9 per cent – as high as most recently in July 2013. For consumers, this means: life is more expensive. And money loses value continuously, because you can buy less for it.

an inflation rate of around two percent is not a Problem – and also, historically, rather the normal case. Problematic Inflation is currently only because at the same time, savers in Germany get so little interest on their Savings like never before. For days money, according to the financial advice FMH is currently on average just 0.2 percent per year. For comparison: in 2012, as it is the least inflation rates above two percent gave, got savers on average more than one per cent interest on the money – the gap was so much smaller than it is today. Until 2010, it was even normal that the interest rates were higher than the inflation rate (see chart). By Saving you are actually rich.

Why is rising Inflation suddenly so strong?

Long was a to high Inflation not an issue at all. In the years 2014 to 2016, the inflation rate was extremely low. In the meantime, the prices declined even slightly – and Economists fear even a deflationary spiral of falling prices and wages. (Such as Deflation, you can see here in our graphic range).

the reason for the low inflation rates were especially strong case for energy prices. Oil, Gas and petrol were cheaper. And since they make up a significant portion in the consumer price index of the Federal Statistical office, the impact of the.

The energy also one of the main reasons are cost, consumer prices rise again. Since December 2015, the Oil price of 38 dollars per barrel has risen to around 55 dollars. Added to this is a statistical effect: The inflation rate is always measured in comparison to the same month last year – in the current case, i.e. for January 2016. And since then, prices have particularly fallen sharply and a low point reached, the distance today is all the greater. He is a whopping 5.8 percent. The rest of the year run is likely to weaken this effect, however, the gains will be correspondingly less.

But it is not alone the more expensive energy that drives the inflation rate up. Also foods were significantly more expensive. They rose 3.2 percent.

What does this mean for savers?

For savers in the Long-standing interest of the low by the rising Inflation even more unpleasant. Because if you have money in a Savings account, money market or savings account by horten, you not only get no interest on it. The money loses by Inflation, much of its value. The purchasing power decreases.

Out of this Problem, there are really only two ways out: Either consumers to stop saving and put your money instead in the consumption. Or you can invest it in stocks or real estate. This is the path embarked on in the past few years, many investors – and thus the so-called asset prices sharply in the amount driven. So here it is long since, the rate of Inflation.

when will interest rates rise again?

That interest rates are so low, for several reasons. One of them is the policy of the European Central Bank (ECB). It has reduced the so-called Prime rate to the banks to borrow at their overnight money, since the financial crisis of more than four to zero percent. On deposits of the banks you require even minus the interest. It also buys for the past two years, sovereign bonds of the Eurozone countries to press the interest rates.

With all these measures, the Central Bank, the level of interest rates in the financial market. It’s going down. Add to this, however, further development: in the World there are a lot more savings than credit demand. If no one needs the money of the savers to invest, then the price of this money is falling – it’s the classic law of supply and demand.

In the US you can watch just how both of these trends to reverse slowly. In anticipation of a debt-financed investment program, and tax cuts by the new government of U.S. President Donald Trump the investors in the financial markets on rising interest rates. At the same time, the Central Bank, the Fed has begun, the interest rates for the United States easy to raise.

The Euro-zone, however, is not yet so far. ECB chief Mario Draghi has recently indicated that interest rates will remain very low and bond purchases will continue, the Central Bank until at least the end of the year.

the main reason for the caution of the ECB is the weakness of economic recovery in the Eurozone – which is expressed in rates in many countries, with still very low inflation. In Italy, for instance, consumer prices have fallen by 2016 for the first Time in 50 years. It shows how strong the developments within the Eurozone: While Germany would now probably slowly increase interest rates, would be for other States is still too dangerous.

such As interest rates and why they rise or fall, also read in our Format Finally understand: As interest rates change the world.


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