Consumer prices in Germany rose at a slower pace in October due to lower energy costs than they had been for more than a year and a half. The inflation rate fell to 1.1 percent, as reported by the Federal Statistical Office in a first estimate. In September, it was still 1.2 percent.
Inflation was dampened above all by the development in energy: it was reduced by an average of 2.1 percent. However, food costs 1.1 percent more than a year ago. Services increased by 1.7 percent, including rents by 1.4 percent.
As a result, inflation continues to move away from the target of the European Central Bank (ECB). It is an important indicator of the central bank's monetary policy. For the entire eurozone and its 19 countries, the ECB is aiming for an annual inflation rate of just under two percent in the medium term - far enough from the zero mark. Because prices that are consistently low or wide-spread could mislead businesses and consumers to postpone investment. That can slow down the economy.
In September, the ECB approved higher bank interest rates on bank deposits and the resumption of bond purchases in order to combat the economic downturn and low inflation.
