Lower energy prices have pushed the inflation rate in Germany to its lowest level since June 2021. Consumer prices in November were 3.2 percent higher than in the same month last year, as the Federal Statistical Office announced on Friday in Wiesbaden. The authority thus confirmed preliminary data. “The inflation rate has weakened for the fifth month in a row,” said authority boss Ruth Brand.
In October, consumer prices had risen by 3.8 percent within a year. The annual inflation rate was 4.5 percent in September and 6.1 percent in August. At the beginning of the year there was even an 8 in front of the decimal point. In November, the inflation rate reached its lowest level since June 2021, at 2.4 percent.
Despite the decline in recent months, economists expect the inflation rate to average around 6 percent this year. According to an evaluation by the trade union Böckler Foundation, many employees under collective bargaining agreements have to accept further losses in real wages, despite comparatively high wage agreements. Accordingly, collective bargaining wages rose by an average of 5.6 percent in the current year and thus remained below the assumed average inflation of 6.0 percent.
The head of the foundation’s own WSI tariff archive, Thorsten Schulten, recently explained that inflation was only exceeded in most cases when the individual tax and duty advantages of the high one-off payments were taken into account.
Significantly increased prices are a burden for consumers. People can afford less for their money. This slows down private consumption – an important pillar of the German economy.
Heating oil and natural gas are significantly cheaper
Energy cost 4.5 percent less in November than a year earlier, curbing the inflation rate. Last year, energy prices rose sharply as a result of Russia’s war of aggression against Ukraine, driving up overall inflation.
Light heating oil (minus 19.4 percent) and natural gas (minus 18.3 percent), among other things, were significantly cheaper in November. A visit to the gas station cost 6.9 percent less than a year before. Electricity, however, rose in price by 1.6 percent.
According to confirmed data, food prices rose above average by 5.5 percent. However, the increase was no longer as strong as in previous months. Consumers had to pay noticeably more than a year before, especially for fruit (plus 12.0 percent) as well as for sugar, jam, honey and other confectionery (plus 11.9 percent).
According to statisticians, consumer prices fell by 0.4 percent in November compared to the previous month of October.
Further decline in inflation expected in 2024
Economists expect inflation to continue to fall. For example, the Council of Experts assessing overall economic development is assuming an average inflation rate of 2.6 percent in the coming year.
However, according to many economists, the inflation rate is likely to temporarily rise again to around 4 percent in December. Last year, the state covered the one-time cost of the December deduction for gas and district heating customers. This effect no longer applies this year.
