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Germany announces a multibillion dollar inflation relief package

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The German government has announced a $65 billion dollar relief package to help citizens facing soaring inflation and surging energy costs as Russia cuts off its gas supplies to Europe.

A MART?NEZ, HOST:

The German government has announced a $65 billion relief package for its citizens.

RACHEL MARTIN, HOST:

Yeah. This is all designed to help ease the burden of soaring inflation and surging energy costs as Russia cuts off its gas supplies to Europe.

MART?NEZ: NPR's Rob Schmitz is on the line from Berlin to talk about this. Rob, this package comes just a couple of days after Russia's state-owned energy company Gazprom announced an indefinite halt of natural gas in the key pipeline that supplies Germany and much of Europe. How much of a factor was that in this aid package?

ROB SCHMITZ, BYLINE: The erratic supply of natural gas from Russia was a big factor behind this relief package. For months, Gazprom has cut gas supplies through its pipeline to Europe and sometimes resumed those flows. We've seen this over and over. And each time, the company claims it's shutting down the pipelines for maintenance. But German officials roll their eyes at this. And they say that Russia's obviously using energy as a weapon against the European Union, which is supporting Ukraine and which has imposed a range of sanctions on Russia.

German economy minister Robert Habeck spoke this weekend about the latest cut in gas deliveries to Germany through the Nord Stream 1 pipeline. Here's what he said.

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ROBERT HABECK: (Speaking German).

SCHMITZ: And he's saying here that Nord Stream 1 should be running at full capacity. But then there's the erratic decisions by the Russian government, which means that Germany should not count on any more gas coming through that pipeline this winter.

MART?NEZ: And how much of a problem will that scenario be for Germany?

SCHMITZ: Very big problem - but Germany's government has worked very hard to wean itself off of Russian natural gas. Prior to the war, Germany relied on Russia for more than half its natural gas supply. In August, that was down to less than 10%. Now, August is not a month where Germany typically uses a lot of gas. But overall, Germany's been able to sign contracts with other European countries, like Norway and the Netherlands, for alternative gas supplies. And German energy experts I've spoken to say they - will likely not be blackouts this winter for Germany's household sector, but that German industry may suffer.

MART?NEZ: And that's probably not great for the German economy. Which brings us then back to this relief package. How is this going to help Germans get through the winter?

SCHMITZ: This is the third and largest relief package from the government of Chancellor Olaf Scholz. It'll include one-time payments to families, payments for retirees on pensions, and it promises to reduce the price for public transportation. Energy-intensive German industrial companies will be given tax breaks to help them stay afloat and keep people employed. And all of this aims to counter the impact that inflation has had on the economy here. Prices rose 8% in August alone. The price of groceries rose nearly 17% last month. And natural gas is 10 times more expensive than a year ago. So the pressure on German citizens and companies is very real here.

MART?NEZ: Things are OK right now, Rob. But, I mean, how concerned is the government about social unrest over all this?

SCHMITZ: Very much so - German officials have been warning local police for months that soaring costs may lead to protests. And both left-wing and right-wing groups say they'll begin weekly demonstrations against the government. Labor unions have also warned about this. Beyond Germany, we saw big protests over inflation in neighboring Czech Republic over the weekend. Tens of thousands took to the streets in Prague, demanding that their government do more about this. And this could get a lot worse. We've got months before winter begins and this energy shortage starts to inflict real pain here in Europe.

MART?NEZ: That's NPR Berlin correspondent Rob Schmitz. Rob, thanks.

SCHMITZ: Thank you.