November 30, 2022

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German government agrees to cap gas prices |  Abroad

German government agrees to cap gas prices | Abroad

The German government will allocate tens of billions to mitigate rising gas prices and keep energy companies afloat. This was announced by Chancellor Olaf Schultz on Thursday. It was also announced that the inflation rate in September was 10%.

Scholz announced a “defense shield” of up to 200 billion euros to protect consumers and businesses. This money will come from a stabilization fund that was previously created to mitigate the impact of the Corona crisis.

“The prices have to come down,” Schulz said at a news conference. He said the government wanted to do everything in its power to do so. The controversial and pre-planned gas tax is off the table.

Germany is particularly vulnerable to rising energy costs because it relies heavily on Russian gas. Higher prices force some companies to reduce production and affect the purchasing power of consumers.

According to Finance Minister Christian Lindner, Germany is fighting an “energy war for prosperity and freedom.” The announced actions for him are “a clear response to Putin.”

Critics have warned that curbing the price of gas could add to Germany’s already high inflation. This action will also result in less incentive to save on scarce gas.


Inflation hit 10 percent in Germany in September, a new record for a united Germany. This is evidenced by the first official estimate released by the German Statistics Office on Thursday.

This is the highest value in seventy years if we look at the former West Germany. In the 1950s, there were inflation levels above 10 percent. In the meantime, the calculation method has been modified.

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Thus prices increased by 10% compared to September 2021. Prices of energy and food in particular rose sharply. The supply problems caused by the Corona crisis also continue to occur. Moreover, two emergency measures to support the average German citizen have been terminated: the so-called 9-euro-a-month ticket for public transport and a fuel discount.

More detailed numbers will follow on October 13.

Read also: The energy price cap for a Dutch family results in an average of 190€ per month