The price increase in Germany has recently slowed down somewhat.
(Photo: IMAGO/Martin Wagner)
Frankfurt The inflation rate in Germany fell significantly more than expected in May. Consumer prices increased by 6.1 percent compared to the same month last year. This was announced by the Federal Statistical Office on Wednesday based on a preliminary estimate.
In April, the inflation rate was still 7.2 percent. Economists surveyed by the Reuters news agency had expected a decline to 6.5 percent in May.
The figures from Germany are an important indication of the inflation rate in the entire euro area, which the European statistical office Eurostat will publish on Thursday. The price dynamics in the individual countries of the currency area are decisive for the future interest rate policy of the European Central Bank (ECB).
At the beginning of May, the ECB raised the key interest rate in the euro zone to 3.75 percent for the seventh time in a row. Experts expect further rate hikes. Many businesses and consumers are wondering how the economy will take this. Historically, it has seldom been possible to get high inflation rates under control without triggering a severe recession by raising interest rates sharply.
Commerzbank economist: All-clear is not appropriate
Commerzbank chief economist Jörg Krämer now sees hope for a further decline in inflation in the coming months, at least in the short term. “Inflation hasn’t fallen just because energy and food price increases are slowing down,” he stresses. On the contrary, core inflation, from which energy and food are eliminated, fell from 5.8 to 5.3 percent, according to Commerzbank estimates.
According to Krämer, the decline is not only related to the introduction of the 49-euro ticket at the beginning of the month.
In the medium and long term, however, Kramer is more pessimistic. An all-clear is not appropriate. “The rapidly rising labor costs speak against a sustained calming of inflation.”
Inflation rate in the energy sector has fallen significantly
In May, the development of energy prices in particular dampened inflation. These only rose by an average of 2.6 percent, in April the year-on-year increase was 6.8 percent.
Food prices rose 14.9 percent, after 17.2 percent in April. Services cost an average of 4.5 percent more than a year earlier.
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