Inflation was lower in January than it has been since June 2021. Nevertheless, food has become more expensive, and some products stand out in a particularly negative way.
Consumer prices rose by an average of 2.9 percent in January. The Federal Statistical Office has now confirmed an earlier estimate. The last time there was a lower inflation rate was in June 2021 at 2.4 percent; in December 2023 it was still at 3.7 percent. Energy became cheaper, but food prices continued to rise.
“The price situation for energy products is visibly easing, and food price increases are continuing to slow,” said the President of the Federal Statistical Office, Ruth Brand, explaining the decreasing inflationary pressure.
Food became more expensive by an average of 3.8 percent within a year. Consumers had to dig particularly deep into their pockets for fruit (plus 10.2 percent) and vegetables (plus eight percent). Bread and grain products also became more expensive (plus 5.4 percent). In contrast, dairy products (minus 4.6 percent) as well as cooking fats and oils (minus 9.1 percent) were available at lower prices. In addition, other oils such as sunflower oil, rapeseed oil and the like (minus 21.6 percent) as well as butter (minus 17.5 percent) became cheaper in January.
Olive oil will be 46 percent more expensive
The price increases for olive oil were particularly notable: it cost 46 percent more on average than in January of the previous year. Crop failures in southern Europe were noticeable here. The region suffered from severe drought.
In Spain, the annual yield, which averaged around 1.5 million tons in recent years, fell to less than half (665,000 tons) in the 2022/2023 harvest season. The Ministry of Agriculture in Madrid expects only a slight recovery for the current 2023/24 season.
Spain is considered the most productive country and is the world’s largest producer of olive oil. Almost half of the olive oil consumed worldwide comes from Spain. Looking at consumption in the EU, Spanish production even accounts for 70 percent. If the harvest volume there is low, it has far-reaching consequences. Olives are also grown in Italy, Greece and Turkey and – depending on the growing region and variety – are harvested between October and February.
Coffee more expensive on the world market
Meanwhile, coffee prices in supermarkets have fallen in recent weeks. Retail chains such as Aldi, Rewe and Edeka reduced prices shortly before Christmas. However, the price on the world market has recently risen again to 186 cents per pound.
“The price increase was favored by concerns about drought in the growing areas of Brazil, the world’s largest producer and exporter of Arabica,” said Carsten Fritsch, raw materials analyst at Commerzbank, in a comment.
According to Commerzbank, there are signs of higher coffee supply in Brazil for the 2024/25 harvest year. In its first forecast from January, the Brazilian forecasting authority Conab expects an increase of 5.5 percent compared to the previous year to 58.1 million bags of 60 kg each.
Orange juice is more expensive than it has been since the 60s
At the same time, prices for orange juice are rising significantly on the futures markets. The juice costs more than it has since the 1960s. “There are bad harvests and far too little supply,” explains Emal Atif, economics editor ARD financial editorial team in the show Economy update on tagesschau24.
The largest producing countries are Brazil and the USA. “But in Brazil the situation is such that inventories are low because of bad weather conditions.” There has been a bacterial plant disease in the USA for years that destroys many plants. In addition, several hurricanes destroyed the crop in 2022. “Consumers have to prepare for further rising prices,” said Atif.
Energy cheaper – district heating significantly more expensive
Consumers in Germany at least felt relief in energy prices in January: Energy was 2.8 percent cheaper overall in January compared to the same month last year. Household energy cost 3.4 percent less than in January 2023, while fuels such as gasoline were 2.0 percent cheaper. Solid fuels (minus 13.9 percent), heating oil (minus 9.3 percent), electricity (minus 6.8 percent) and natural gas (minus 6.2 percent) also cost less. District heating rose in price by 13.3 percent within a year.
Services cost 3.4 (December: plus 3.2) percent more. Restaurant prices rose by 6.6 percent. The old VAT of 19 percent has been due again in the catering industry since the beginning of the year. Core inflation, which excludes energy and food prices, fell from 3.5 to 3.4 percent.
Economists expect inflation to fall further
Economists expect inflation to continue to decline over the course of the year, but perhaps not at the same pace as before: negative factors include the increase in the CO2 price from 30 euros per ton of carbon dioxide to 45 euros and the return to the regular VAT rate on food of gastronomy at the beginning of the year.