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BERLIN: The German government should create a €5.4 billion (US$5.40 billion) emergency relief package to cushion the blow of rising living costs on low-income households, a study said on Wednesday (Jul 13).

Food, housing and energy make up nearly two-thirds of consumption for households in the bottom 20 per cent of income levels, while that figure is only 44.1 per cent for households in the top 20 per cent, said the study from the DIW economic research institute and the charitable group of the Protestant church, Diakonie Deutschland.

Diakonie, with the support of DIW researchers, proposed that the government create a crisis mechanism that would provide a supplement to households that already receive government aid of at least €100 per month for a period of six months.

“We are currently seeing highly unsocial inflation,” said DIW president Marcel Fratzscher in a statement. “One-off payments are only a temporary solution, not a permanent one. We need permanently higher wages and social benefits,” he added.

German Chancellor Olaf Scholz, whose government has already passed two multibillion-euro relief packages for households and companies, has embarked on a series of meetings with trade union and employers association leaders to find a way to address demands for pay rises without further exacerbating inflation.

German inflation reached 8.2 per cent in June, cooling slightly after hitting 8.7 per cent in May, its highest level in nearly half a century, as energy and food prices have skyrocketed due to the war in Ukraine and supply bottlenecks.