As of: March 12, 2024, 4:52 p.m
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Thanks to stable food prices, inflation is steadily leveling off.
© Sina Schuldt/dpa
Inflation in Germany has been falling continuously for months.
In addition to cheaper energy, the reasons for this are relatively stable food prices.
The ECB's desired core goal is within reach.
Berlin - Cheaper energy and barely rising food prices are pushing inflation in Germany to its lowest level since June 2021. Consumer prices only rose by 2.5 percent in February compared to the same month last year, after 2.9 percent in January.
The Federal Statistical Office (Destatis) announced this on Tuesday regarding final calculations.
“The price situation for energy continues to ease,” said Destatis President Ruth Brand.
“Food price increases have slowed significantly and are now below overall inflation for the first time in more than two years.” From January to February, overall prices rose by 0.4 percent.
Despite the positive trend, economists have not yet given the all-clear.
Core inflation – which excludes often fluctuating energy and food prices – remained at 3.4 percent.
Falling energy is the main reason for falling inflation
The falling inflation rate in February was primarily due to cheaper energy: it cost an average of 2.4 percent less than in February 2023, after these prices had even fallen by 2.8 percent in January.
For the first time since November 2021, food prices rose more slowly than prices overall: they only cost 0.9 percent more, after an increase of 3.8 percent in January.
3.4 percent more were charged for services than a year before.
The European Central Bank (ECB) is aiming for an inflation rate of two percent as the ideal value for the euro zone.
The German inflation rate, calculated according to European standards, was noticeably higher at 2.7 percent in February.
However, the leading economic research institutes unanimously expect that inflation in Germany will continue to decline this year and next.
The government advisors from the Kiel IfW Institute, for example, assume that consumer prices (CPI) will only rise by 2.3 percent on average in 2024 and by 1.7 percent next year.
As a result, “real disposable incomes would rise again in the current year for the first time in three years and stimulate private consumption”.
Lots of food cheaper
Prices for household energy fell by 3.6 percent year-on-year in February.
Consumers benefited primarily from lower prices for firewood, wood pellets or other solid fuels (-11.2 percent), but also for electricity (-7.9 percent) and natural gas (-7.5 percent).
Refueling became cheaper by a minimal 0.4 percent.
People especially feel relief when buying food.
Fresh vegetables (-10.6 percent) and dairy products (-5.1 percent) were significantly cheaper than a year ago.
There was a noticeable price decline of 21 percent for sunflower oil, rapeseed oil, etc., while olive oil rose massively in price by almost 51 percent.
In contrast, confectionery such as sugar, jam and honey cost significantly more (+9.9 percent).
The price increases for fruit (+5.7 percent) and for bread and grain products (+3.5 percent) were also above average.
Overall, food costs a third more than in 2020. Vacations also became more expensive: package holidays cost 6.5 percent more in February than a year ago and nine percent more than in January.
Despite inflation and the economic downturn, most Germans do not want to give up traveling, as several surveys conducted at the ITB tourism trade fair recently showed.
(Reuters, lf)