Inflation in Germany fell to its lowest level since June 2021 in February. Despite cheaper energy, consumer prices rose – but only slightly: by 2.5 percent.
Ease in energy prices pushed inflation in Germany to its lowest level in around two and a half years in February. Consumer prices rose by 2.5 percent after 2.9 percent in January. The Federal Statistical Office announced this today in its final calculations.
Food prices below overall inflation
In addition to falling energy prices, fewer rising food prices contributed to the overall development. “The price situation for energy continues to ease. The increase in food prices has slowed significantly and is now below overall inflation for the first time in more than two years,” said the President of the Federal Statistical Office, Ruth Brand.
Food costs 0.9 percent more in February, after an increase of 3.8 percent in January. Since April 2023, this price increase has slowed steadily. In November, for example, it was 5.5 percent, in December it was 4.6 percent, and in January it was 3.8 percent. Fresh vegetables and dairy products in particular were cheaper than a year ago. Olive oil, on the other hand, became “enormously” more expensive, with prices rising by almost 51 percent. Sugar, jam and honey were also almost ten percent more expensive.
Energy continues to become cheaper
Energy cost an average of 2.4 percent less than in February 2023, after these prices even fell by 2.8 percent in January. Despite the energy price brakes that expired at the beginning of the year and the increase in the CO2 price to 45 euros per ton of carbon dioxide (CO2), energy became cheaper for the second month in a row.
3.4 percent more were charged for services than a year before. Prices for goods rose below average by 1.8 percent.
Core inflation remains high
As the Federal Statistical Office also reports, consumer prices rose by 0.4 percent in February 2024 compared to the previous month of January 2024. Despite the positive trend, economists have not yet given the all-clear. The so-called core inflation – which excludes the often fluctuating energy and food prices – remained at 3.4 percent.
In the afternoon (CET) the inflation data from the USA will be the focus of events. They are a decision-making aid for the US Federal Reserve Bank, which will decide on interest rates on March 20th. The majority of economists do not expect interest rates to fall. The labor market is robust and there is no recession in sight. “The Fed can therefore calmly wait for the next figures before it initiates the expected interest rate turnaround,” comments Burkhard Fehling from Commerzbank.