Inflation fell to its lowest level in over three years in September thanks to falling energy prices. But individual foods such as olive oil or butter are becoming increasingly expensive.
The rise in consumer prices continued to ease in September. The Federal Statistical Office announced today that the increase in consumer prices, at an annual rate of 1.6 percent, was weaker than it has been in more than three years. Lower inflation was last recorded in February 2021 at 1.5 percent.
This confirms the first estimate, but the price details of the individual product and service groups are also published in the current report.
Fuel prices are falling significantly
It becomes clear that it is primarily the lower energy prices that are slowing the pace of inflation. Consumers benefit from the fact that energy products, which are heavily weighted in the consumer price index, were on average 7.6 percent cheaper in September than a year earlier.
For example, fuel prices fell by 12.6 percent compared to the previous year. Household energy prices fell by 4.0 percent. Light heating oil cost 17.9 percent less than a year ago. When buying firewood, wood pellets or other solid fuels, consumers had to pay twelve percent less.
Electricity, at minus 6.4 percent, and natural gas, at minus 1.9 percent, were also cheaper compared to September 2023. District heating, on the other hand, was significantly more expensive at plus 31.8 percent.
Butter is almost a third more expensive
However, food prices are continuing to rise, even at a high pace for some products. Olive oil and butter prices increased by 29.6 and 29.3 percent. Other food groups such as sugar, jam, honey and other confectionery rose by 5.4 percent. Fruit rose in price by 3.7 percent, bread and grain products by 1.2 percent.
The so-called core inflation excluding energy and food fell to 2.7 percent. Services were also more expensive than a year ago, with an increase of 3.8 percent. This reflects the comparatively high collective bargaining agreements for many professional groups.
Energy price effect loses strength
The European Central Bank’s (ECB) inflation target for the currency area is two percent and has now been achieved. The German inflation rate, calculated according to uniform European standards, fell to 1.8 percent in September. Inflation in the euro zone also recently fell to 1.8 percent, its lowest level in a good three years. The financial markets are therefore expecting a further interest rate cut by the ECB in October.
Economists expect inflation in Germany to initially remain below the two percent mark, but to pick up again at the end of the year. DZ Bank’s justification is that the price-dampening effect on energy prices will become less effective.