Inflation in Germany is continuing to decline thanks to lower energy prices. The annual inflation rate was 3.8 percent in October, as the Federal Statistical Office announced on Monday based on preliminary figures. It was the lowest value since August 2021, which was also 3.8 percent. In September, consumer prices rose by 4.5 percent compared to the same month last year and by 6.1 percent in August. At the beginning of the year there was even an eight in front of the decimal point.
Energy cost 3.2 percent less than a year earlier. However, according to preliminary data, food prices also rose above average in October (plus 6.1 percent). Significantly increased prices are a burden for consumers. People can afford less for their money. This is slowing down private consumption, which is an important pillar of the German economy.
Many people have recently been forced to give up. In a recently published survey commissioned by the German Savings Banks and Giro Association in the summer, 71 percent of the more than 4,800 respondents said they had to go without on a smaller or larger scale because of the high prices. That is six percentage points more than in 2022. Consumer prices were unchanged in October compared to the previous month of September.
According to economists, inflation is likely to weaken further by the end of the year. Leading economic research institutes recently expected the inflation rate to fall to 2.6 percent in the coming year, compared to an expected average of 6.1 percent for the current year.
The European Central Bank (ECB) has so far counteracted increased inflation in the euro area and Germany with ten interest rate increases in a row. Recently, the monetary authorities stopped turning the interest rate screw any further. Higher interest rates make loans more expensive, which can slow down demand and counteract high inflation rates. The ECB sees its goal of stable prices with inflation of 2.0 percent in the euro area in the medium term.
