Germany’s inflation rate drops to 3.2 per cent in November

THE German inflation rate fell in November to its lowest level in around two and a half years, helped mainly by falling energy prices.

As announced in the provisional estimate from the Federal Statistical Office this Wednesday, November 29, consumers in Germany had to pay an average of 3.2 per cent more for goods and services than a year before, spiegel.de reported.

June 2021 was the last time there was a lower value, when the figure was 2.4 per cent. The inflation rate in October was 3.8 per cent. From October to November, consumer prices fell by 0.4 percent.

This strong decline is surprising considering that a drop of 3.5 per cent had been predicted by economists surveyed by Reuters.

A noticeable decline in oil prices also occurred recently, despite the escalating Middle East conflict, causing energy to become cheaper than it was in November 2022, falling by 4.5 per cent.

Which sectors saw the biggest increases?

However, food products remained one of the main things to reflect an increase, costing an average of 5.5 per cent more this month. Services also rose in price by 3.4 per cent. The inflation rate excluding food and energy, often referred to as core inflation, was 3.8 percent.

Timo Wollmershäuser, the economic head of the Ifo Institute, said that he expected the price pressure to continue, suggesting: ‘The inflation rate is likely to temporarily rise again to around four per cent in December’.

Gas prices for German consumers fell sharply in December 2022 because the state covered the costs of the discount. ‘But, at the beginning of next year the inflation rate will fall to below three per cent’, Wollmershäuser predicted.

Deutsche Bank expects consumer prices to rise by an average of 2.8 per cent next year, after last year’s 6.0 per cent increase. Service providers in particular are likely to try to pass on increased wage costs to their customers. The ECB is aiming for an inflation rate of two per cent as the ideal value, added the aforementioned news outlet.