BERLIN (Reuters). Germany’s most prominent residential landlord Vonovia said that rents will rise if inflation continues to be high. This was because consumer prices have risen in Europe’s biggest economy in Europe in the past half century.

Rolf Buch said in an interview that “if inflation is permanent at four percent,” rents would also need to increase each year. Buch oversees a portfolio consisting of approximately 565,000 apartments and spoke with Handelsblatt. We cannot pretend that rents will not be affected by inflation.

LEG of Vonovia, a competitor with 166,000 flats said that inflation will be included in the rental fees, if it continues. A spokesperson for LEG told Reuters that the rental market would not separate from general price developments.

Prices in Germany, like in many other European nations, have seen a sharp rise in the last months. They were driven higher by both supply chain issues after the pandemic as well as the conflict in Ukraine.

The May increase in consumer prices was 8.7%, an unprecedented level since the Winter of 1973/1974 and the first oil crises.

Buch stated that Vonovia’s average rental price increased by 3.1% during the first quarter. Buch stated that tenants will be paying more for energy in the future, which could result in a rise of up to 2 months per annum.

The spokesperson stated that LEG rents increased by 2.7% on average in the first quarter.

Germany is particularly sensitive to this issue, as rents in Germany have been stable for decades. This has created a culture of middle-class German families living in rented apartments throughout their lives.

A large portion of the population is concerned about inflation. 94% don’t expect prices to drop in the near future, while 56% anticipate prices continuing to climb. This was according to a Forsa survey.

German Chancellor Olaf Scholz called Wednesday on employers, unions, and the government to come up with joint actions against high inflation.

Scholz stated that “we need to make a concentrated effort in an extremely unusual situation.” Scholz stated that credit-financed subsidy were not an option, especially since Germany will be returning to its constitutionally mandated debt limit next year.