2024-04-03 16:34:38
Lower than it has been in three years
Inflation falls to 2.2 percent
Updated April 2, 2024 – 2:46 p.mReading time: 2 min.
Inflation is falling in Germany: consumer prices rose less in March than in the previous month.
Inflation in Germany has fallen to its lowest level in almost three years, partly because food has become cheaper for the first time since 2015. In March, consumer prices only rose by 2.2 percent compared to the same month last year, as the Federal Statistical Office announced its estimate on Tuesday. “This is the lowest value since April 2021,” said the statisticians. In February the inflation rate was 2.5 percent. From February to March prices rose by 0.4 percent.
Contributing to the falling inflation were food prices, which fell for the first time in over nine years: They fell by 0.7 percent compared to March 2023, after rising by 0.9 percent in February. “This means that going to the supermarket has actually become cheaper,” said VP Bank’s chief economist, Thomas Gitzel. “This is the icing on the cake of the positive inflation trend.” Energy became even cheaper – despite the price brakes that have now expired: they cost an average of 2.7 percent less than a year before (February: -2.4 percent). However, 3.7 (February: 3.4) percent more were charged for services. Core inflation – which excludes energy and food prices – fell slightly to 3.3 percent.
“Service prices rise due to wage increases”
However, economists are not yet giving the all-clear. “At first glance you can sit back and relax,” said Commerzbank chief economist Jörg Krämer. “But the details call for caution.” This is particularly true for service prices, which have unexpectedly increased due to the sharp rise in wages. “The overall inflation rate is also likely to rise slightly again in the coming months,” said Krämer. “It is too early for an all-clear on the inflation front – as well as for interest rate cuts by the European Central Bank (ECB).”
German consumers can at least hope for subdued inflation because fewer companies want to raise their prices in the next few months: the barometer for their price expectations fell to its lowest level in three years in March, as the Munich Ifo Institute found 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.”
The Frankfurt monetary authorities are aiming for an inflation rate of two percent in the euro zone. The German inflation rate, calculated according to uniform European standards, was just above 2.3 percent in March. According to a survey by the Reuters news agency, a large majority of economists currently expect a first interest rate cut in June.