Inflation in Europe’s largest economy is now almost at the levels it was in April last year. A peak of over 10% was reached in October, but the dampening effect of lower energy prices means that inflation is now easing further. The increase in food prices has also eased slightly, although they are still significantly higher than in the previous year, which affects the purchasing power of households.
Based on the harmonized European measurement method, inflation was 7.6%. This method is used by the European statistical agency Eurostat to measure inflation. Eurostat will release new inflation data for the eurozone next week.
Stagnation
Europe’s largest economy showed neither growth nor contraction last month compared to the fourth quarter of last year. In the last three months of 2022, the German economy contracted by 0.5 percent due to high inflation weighing on household purchasing power.
According to the statistics agency, the economy was supported by business investment and exports, but consumer spending remained under pressure due to high inflation. Economists generally expected the German economy to grow by 0.2% in the recent quarter.
Germany, the Netherlands’ most important trading partner, has managed to avoid a recession. A recession is defined as two consecutive quarters of contraction. For all of 2023, the German government forecasts economic progress of 0.4%.