BERLIN: Soaring consumer price growth is the greatest threat for German output, Finance Minister Christian Lindner says.

“Prices are soaring, that’s the biggest danger for economic growth. It undermines the substance of our economy,” Lindner told German public broadcaster ARD in an interview on Sunday.

“But we cannot fight inflation with borrowed money as we did with the corona pandemic.” Germany’s inflation rate hit 8.8% last month, the highest level since the euro was introduced, fanned by soaring power prices.

Bundesbank President Joachim Nagel has repeatedly said that consumer-price growth could hit double digits later this year and on Saturday warned that Germany faced a “tough winter.”

Lindner’s pro-market Free Democrats are part of Chancellor Olaf Scholz’s ruling coalition, which has pledged about €100bil in assistance measures to protect households and companies from soaring prices.

Still, the finance minister has repeatedly said that Germany must return to constitutional rules limiting borrowing known as the “debt brake” in 2023.

“Fighting inflation is always associated with a temporary economic slowdown, but that’s the price of stopping this inflation,” according to Lindner.

“What we can do is protect healthy companies, healthy livelihoods” and “we must cushion people’s social hardships. No one will freeze in winter or go hungry for financial reasons,” he said.

“But we cannot work with borrowed money like we did during the coronavirus pandemic.”

 - Bloomberg