Finance Minister Christian Lindner warns of wage-price spiral

Prices in Germany continue to rise. Even Finance Minister Christian Lindner knows this. He is now making clear noises – and warning of a scenario in which prices and wages continue to rock up.

Federal Finance Minister Christian Lindner warns of increasing inflation due to significantly rising wages and salaries. “The danger of a wage-price spiral is real,” the FDP chairman told Reuters on Monday. “The inflation trend would then be further strengthened.”

A wage-price spiral is a scenario in which prices and wages continue to rock up. In concrete terms, this is how it works: because employees demand and receive permanently higher wages in the face of inflation, the costs for companies are rising. These, in turn, they pass on to consumers, the price level consequently increases.

In Germany, the inflation rate in April, driven by sharply rising food and high energy prices, was 7.4 percent. This is the highest level since October 1981. IG Metall, for example, had recently demanded an 8.2 percent increase in wages for employees in the steel industry – with a term of only twelve months.

Lindner said that in the current situation, the collective bargaining partners have a high responsibility, which they have always fulfilled in recent years. “I hope for that again now. The first signs that one-off payments could play a role this year are already beginning to appear.”