The ECB raised interest rates from record lows last month to fight off inflationary pressure but further hikes are almost certain as the price growth outlook is failing to improve. "The upside risk for inflation is high, in particular in the event of a complete stoppage of gas supplies from Russia." This then raises the risk of rapid wage increases, especially given record low unemployment, which could perpetuate high inflation via a wage-price spiral, the Bundesbank warned. are dependable, built to last and can be reliably sourced with domestic delivery. Online shopping for Industrial & Scientific from a great selection of Durable Medical Equipment, Apparel, Lab Supplies, Patient Treatment Equipment & more. "Overall, the inflation rate could reach 10% in autumn," the Bundesbank said. Energy costs will meanwhile keep pushing inflation higher and a peak is unlikely before the autumn at around five times the European Central Bank's 2% target. High prices and a shortage of gas are already forcing Germany to curtail consumption, with energy-intensive sectors from metal output to fertilizer production suffering heavily. "The high degree of uncertainty over gas supplies this winter and the sharp price increases are likely to weigh heavily on households and companies." Russia has been curtailing gas exports in response to Western sanctions over its war in Ukraine and many if not most economists now see a German recession as an inevitability. "Declining economic output in the winter months has become much more likely," the central bank said. With its oversized industry heavily exposed to Russian gas, Germany is among the most vulnerable to any cut-off in energy supplies and soaring costs are already weighing on output with more pain expected. Reuters | Frankfurt | Updated: 22-08-2022 15:46 IST | Created: 22-08-2022 15:31 IST Bundesbank Image Credit: WikipediaĪ recession in Germany, the euro zone's biggest economy, is increasingly likely and inflation will continue to accelerate and could peak at more than 10% this autumn, the Bundesbank said in a monthly report on Monday.