German Bundesrat clears state relief on gas prices

Berlin, Nov 15 The Bundesrat, ot upper house of the German Parliament, has approved the government's plan to cover December's gas bill for households and certain businesses.

The payment is intended to bridge the gap until the planned introduction of the gas price brake next March, reports Xinhua news agency.

Private gas consumers and smaller businesses with annual gas consumption of up to 1,500 megawatt hours will be relieved of "dramatically increased costs" through the one-time payment, the Bundesrat said in a statement.

Although wholesale prices for gas have recently fallen sharply, "further developments remain uncertain", Minister for Economic Affairs Robert Habeck warned, calling the Bundesrat's decision a "very important step" for consumer and business relief.

Driven by soaring energy prices, inflation in Germany rose to 10.4 per cent in October, according to the Federal Statistical Office (Destatis).

Despite a value-added tax (VAT) reduction from 19 per cent to 7 per cent, the price of natural gas has more than doubled year-on-year.

The VAT reduction is part of a series of inflation relief measures totaling 95 billion euros ($97 billion).

The government has also set up a "protective umbrella" worth 200 billion euros, which is intended to finance the gas price brake and the cap on electricity prices.

So far, the relief provided by the VAT reduction and the lower wholesale prices has not prevented the rise in consumer prices in Europe's largest economy.

According to the German price comparison website Check24, more than 400 gas suppliers have raised prices or announced increases since the end of September.

Also on Monday, members of the conservative CDU/CSU (Christian Democratic Union/Christian Social Union) faction of the Bundesrat blocked the government's planned overhaul of the so-called "Hartz IV" social benefits system, which foresaw the introduction of "Buergergeld", or "citizens' income" by raising the level of benefits from 449 euros per month to 502 euros.

"For many people, there will be a cold, bitter winter if the citizens' income fails," the social association VdK warned, adding that the CDU should "not turn a blind eye to the people's need".