Joachim Nagel, President of the Bundesbank, assessed that annual inflation in Germany currently stands at approximately 2.7 percent. However, he warned that inflation could rise even further depending on several volatile external factors.
Nagel emphasized that the situation surrounding the Strait of Hormuz is the critical vulnerability of the global economy. According to him, the ongoing crisis involving Iran is certain to significantly escalate the cost of living within Germany.
The Bundesbank President stressed that the lack of transport capabilities via the Strait of Hormuz is not the sole concern. He pointed out that the conflict has also led to the destruction of facilities necessary for the processing and refinement of crude oil and natural gas. Consequently, he cautioned that it may take an extended period before refineries can restore their previous production output. Nagel concluded by warning that even if the Strait of Hormuz were to reopen fully and stabilize, high energy prices could remain a problem for longer.
Furthermore, he flagged that rising insurance premiums for cargo ships could contribute to price increases, given the anticipated elevation of risk. Overall, the Bundesbank President offered a cautious assessment of what he characterized as not favorable prospects for the economy.