Updated Article:
Germany's Inflation Chills Down Again
The whims of inflation in Germany showed no signs of warming up in November. According to the Federal Statistical Office in Wiesbaden, the annual inflation rate dropped to a chilly 3.2%, a decrease from the previous month's 3.8%. Head of the Federal Statistical Office, Ruth Brand, affirmed this information during a Friday briefing, stating, "The inflation rate has weakened for the fifth month in a row."
In September and August, the inflation rate clocked in at 4.5% and 6.1% respectively. And at the start of the year, an ear-piercing 8% was the norm. But following a steady descent, November's inflation rate hit its lowest point since June 2021, at a comfortable 2.4%.
Fueling this downward trend was a dip in energy costs, which were 4.5% less expensive than the previous November. The drop in prices for light heating oil (-19.4%) and natural gas (-18.3%) played a significant role, as did the decrease in prices for other energy sources. Conversely, electricity prices saw a minor increase of 1.6%.
Food prices, however, refused to succumb entirely to deflationary pressures. In fact, they inched up by an alarming 5.5% compared to November 2021. Consumers bore the brunt of this increase, particularly in categories such as fruit (up 12.0%) and sugar, jam, honey and other confectionery (up 11.9%).
The grip of inflation loosened even further when comparing November 2023 to October 2023, with an overall decline of 0.4%.
The insistent rise in prices poses a noticeable burden on consumers. As a result, their purchasing power dwindles, impacting private consumption-a vital economic driver.
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A note for the discerning reader: "The latest data reveals that while overall inflation is easing, several product categories and service prices continue to drive prices upward, while energy prices are counteracting this trend to some degree.*" -Source:
Insights:
- While overall inflation is stabilizing, service prices and select product categories still exert upward pressure on prices.
- Energy prices continue to hold down inflationary pressures, as observed in the January 2025 data.
- Core inflation, or the inflation rate excluding food and energy, is projected to remain high at 2.9% in January 2025.
- The Bundesbank anticipates that inflation will linger around the 2.4% mark for the first half of 2025 before gradually decreasing.
