Price pressure in Germany continues to ease as inflation dropped to 3.2 percent in November, the lowest level since June 2021, according to preliminary figures released by the Federal Statistical Office (Destatis) on Wednesday.
Inflation in Germany has been normalizing more slowly than in other European countries. In August, the inflation rate in Europe’s largest economy still stood at 6.1 percent.
The 4.5 percent year-on-year decline in energy prices had a “particularly dampening effect on the rate of inflation,” Destatis said. This was due to a base effect resulting from the “very high energy price level” in the previous year.
Prices for food, on the other hand, continued to rise faster than the overall inflation rate at 5.5 percent year-on-year. However, food prices no longer rose as markedly as in previous months, according to Destatis.
Despite this development, the German Institute for Economic Research (DIW) said on Wednesday that the “gradual decline in inflation and rising real wages have hardly improved people’s spending mood so far.”
According to a survey published by the credit agency Schufa Holding AG in mid-November, 74 percent of German consumers said that they were consciously spending less money when shopping.
Due to “strong price pressures at the beginning of 2023,” consumer prices are still expected to increase by an annual average of 6.1 percent this year, the German Council of Economic Experts said earlier this month in its report. The Council forecasts an inflation rate of 2.6 percent for 2024. ■