As of: April 2, 2024, 2:07 p.m
By: Amy Walker
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A cashier scans blueberries at the checkout of a supermarket. © Julian Stratenschulte/dpa
The inflation rate continues to decline and falls to its lowest level in three years. In summer it is likely to even fall below the two percent mark.
Wiesbaden – Inflation in Germany fell further in March. The inflation rate in Germany is expected to be 2.2 percent in March 2024, as the Federal Statistical Office announced on Tuesday. This is the lowest value since April 2021; in May 2021 the value was also 2.2 percent.
The inflation rate also fell in the federal states: consumer prices rose more slowly in Baden-Württemberg, Bavaria, Brandenburg, Hesse, North Rhine-Westphalia and Saxony than in February. They increased between 1.6 and 2.8 percent compared to the same month last year, as the state statistical offices announced on Tuesday. In February, the nationwide inflation rate was still 2.5 percent.
The inflation rate is particularly low in Hesse, where at 1.6 percent it is well below the European Central Bank's (ECB) inflation target of two percent. Cheaper energy was primarily responsible for the falling inflation. In Hesse, for example, it cost 5.4 percent less than in March 2023, while food prices fell by 1.4 percent.
Interest rate hopes: Interest rates could fall again in the summer
Companies' falling price expectations, which fell to their lowest level in three years in March, suggest a continued decline in the coming months. The barometer fell to 14.3 points from 15.0 in February, as the Munich Ifo Institute announced in its company survey. “Inflation is continuing to decline and is likely to fall below the two percent mark in the summer,” said Ifo economics chief Timo Wollmershäuser. “From a German perspective, there is nothing that speaks against the ECB cutting interest rates soon.”
Fewer companies are planning to raise their prices, especially in consumer-related industries. There were declines in price expectations in retail and catering, but there were slight increases in hotels and tour operators. In the construction industry, price expectations fell to minus 10.6 points, after minus 6.2 points in February. “Accordingly, the majority of companies even want to lower their prices,” say the Ifo researchers. In the manufacturing sector, only a small majority of companies surveyed want to raise their prices, according to the institute.