According to economists, inflation in Germany slowed down in March, although it was still at a high level. On average, economists expect consumer prices to rise by 7.3 percent compared to the same month last year.
In January and February, the annual inflation rate was still 8.7 percent. The Federal Statistical Office will publish an initial estimate of the development of inflation in March in the afternoon.
“In March, the inflation rate in Germany is likely to fall significantly due to a base effect,” explained the Bundesbank recently in its monthly report. After Russia’s war of aggression in Ukraine about a year ago, energy prices had skyrocketed year-on-year, fueling inflation overall. Now the prices will be compared to the high level of spring 2022. This is called the base effect.
Head of the Bundesbank: The fight isn’t over yet
The government price brakes for gas and electricity, which apply from March 1 retrospectively to January 1, 2023, should also have a dampening effect. According to revised data from the statisticians, inflation was last August at 7.0 percent below the eight percent mark.
For a long time, inflation was mainly driven by high energy and food prices. In the meantime, price increases are affecting more and more parts of everyday life. Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro.
According to economists, inflation in Europe’s largest economy has peaked. However, they do not expect a thorough easing of prices in the current year.
“Our fight against inflation is not over yet,” emphasized Bundesbank boss Joachim Nagel, who sits on the Monetary Policy Council of the European Central Bank (ECB). In March, the monetary authorities of the euro area raised interest rates in the euro area for the sixth time in a row because of persistently high inflation.
