Inflation in Germany has fallen below the eight percent mark for the first time since August 2022. However, inflation in Europe’s largest economy remains high. According to preliminary data from the Federal Statistical Office, consumer prices rose by 7.4 percent in March compared to the same month last year. The Wiesbaden authority will announce the final results this Thursday (8 a.m.). In February, an inflation rate of 8.7 percent was measured.
The last time inflation in Germany was 7.0 percent in August last year was below the 8 percent mark. According to economists, inflation in Germany has now peaked. For consumers, however, the current development does not yet mean any significant relief. In March last year, consumer prices rose by 5.9 percent compared to the same month last year.
Price brakes have a dampening effect
Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro.
The rise in energy prices, which had skyrocketed after Russia’s war of aggression more than a year ago, moderated significantly in March. According to preliminary data, energy prices rose by 3.5 percent compared to the same month last year, after an increase of 19.1 percent in February. The government price brakes for gas and electricity, which have been in effect since March 1, 2023, should also have a dampening effect. On the other hand, people had to spend significantly more on food than a year earlier (plus 22.3 percent).
Compared to the previous month of February, consumer prices in March rose by a total of 0.8 percent.
Declining energy prices
According to economists, people in Germany cannot hope for a thorough easing of prices this year. Leading economic research institutes, for example, expect an inflation rate of 6.0 percent on average for the year. Inflation is not expected to drop noticeably to 2.4 percent until next year – mainly due to falling energy prices. According to revised data from the Federal Office, consumer prices had increased by 6.9 percent in 2022.
