Inflation in Germany fell to 7.4 percent in March

The German Federal Statistical Office (Destatis) announced the main data for March on price increases.

Consequently, annual inflation in Germany, which was 8.7 percent in January and February, dropped to 7.4 percent in March, close to expectations.

In Germany, the consumer price index (CPI) rose 0.8 percent in March compared to the previous month.

The annual inflation expectation was to drop to 7.3 percent in March.

In the same period, while energy prices increased by 3.5 percent annually, it is worth noting that the annual increase in food prices was 22.3 percent, above average. The increase in services was 4.8 percent.

The EU-compliant CPI also rose 1.1 percent on a month and 7.8 percent on a yearly basis in March.

FOOD INFLATION 22.3 PERCENT

In the Destatis statement, it was stated that especially energy and food prices have increased markedly since the beginning of the Russia-Ukraine war, which has a significant effect on inflation.

In the statement, “In March 2023, food prices continued to increase by 22.3 percent compared to the same month of the previous year, above average. On the other hand, the rise in energy prices, which rose rapidly after the Russian invasion of Ukraine in March 2022, slowed significantly to 3.5 percent. It was said.

INFLATION IS CRITICAL FOR THE DECISION OF INTEREST

The inflation outlook will determine how far the ECB will go in raising interest rates and how quickly it will proceed.

While the ECB has raised the main interest rates 6 times in a few months, the interest rate on deposits, which is the determining factor in financial markets, is currently at the level of 3.5 percent.

ECB President Christine Lagarde had left the door open for an interest rate hike for the meeting to be held in mid-April, given high inflation.

Advocates of further monetary policy tightening refer mainly to core inflation, which is net of energy and food prices. Core inflation reached a new record of 5.6 percent in the euro zone last month. (AA)