Inflation in Germany is at its lowest level since the war
Annual inflation in Germany fell to 4.5 percent in September, falling to its lowest level since the start of the war between Russia and Ukraine.
Germany’s Federal Statistical Office (Destatis) announced preliminary data for September on price increases.
Consequently, annual inflation in Germany, which was 6.1 percent in August, decreased to 4.5 percent in September. Thus, the inflation rate in the country fell to its lowest level after the war between Russia and Ukraine. Inflation, which was 4.3 percent before the war, reached 8.8 percent in August 2022 with rising energy prices.
The expectation in the markets was that inflation would decline to 4.6 percent in September.
The inflation rate in the country increased by 0.3 percent monthly. The EU-compliant CPI increased by 0.2 percent in September compared to the previous month and by 4.3 percent annually.
Germany’s core inflation rate, calculated excluding food and energy, fell from 5.5 percent in August to 4.6 percent in September.
FOOD IS THE DRIVING FORCE OF INFLATION
While food has stood out as the biggest driver of prices in the country for months, food prices continued to be the main driver of inflation in September. Prices increased in September by 7.5 percent and energy products by 1 percent compared to a year ago.
Analysts expect the inflation rate to continue falling in the coming months, as the impact of the 9 euro bill on public transport and the discount on fuel is no longer reflected in the previous year’s comparison.
The 9 euro bill and the fuel discount, limited to 3 months in the summer of 2022, temporarily stopped the rise in consumer prices. The monthly public transport ticket in the country is now 49 euros.
INFLATION IS ABOVE THE ECB’S TARGET
It is noteworthy that although inflation has decreased in the country, it is still well above the target of the European Central Bank (ECB).
The ECB had to raise official interest rates ten times in a row in just a few months due to high inflation. While the ECB is targeting 2 percent inflation, the bank’s management has repeatedly stressed that it will decide to raise interest rates further if the data situation requires it.
On the other hand, the German economy contracted by 0.4 percent in the last quarter of last year and by 0.1 percent in the first quarter of the year, but failed to grow in the second quarter of the year.
While many crises such as the Covid-19 epidemic, supply chain disruptions and the war between Russia and Ukraine in recent years have revealed the weaknesses of the German economy, the ability of many countries, especially China, to produce more goods imported from Germany and the The increase in interest rates due to high inflation has caused the economy to be affected and hinders its growth. (AA)