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German inflation slows.

German inflation slows

 Consumer price inflation dropped to 9.6 per cent in the year to December, well down on the 11.3 per cent registered the previous month, after Berlin implemented measures to shield consumers from high gas prices. The figure, published by the federal statistical agency yesterday, was also lower than the 10.7 per cent forecast by economists polled by Reuters. The German data, down from a seven-decade peak of 11.6 per cent in October, follows a sharp fall in Spain and may ease pressure on the ECB, which meets to set rates on February 2. Together, the German and Spanish figures suggest that eurozone inflation could drop lower than the 9.7 per cent forecast by economists when data are published on Friday.

The euro traded 0.9 per cent lower against the dollar on the day, at $1.056. Energy inflation, which soared after Russia invaded Ukraine, slowed to 24.4 per cent in December from 38.7 per cent the previous month and well below a peak of 43.9 per cent in September, reflecting the government subsidies. Meanwhile, services inflation, a better measure of underlying price pressures, accelerated to 3.9 per cent from 3.6 per cent in November. The 9.6 per cent data reflected so-called harmonised prices, a pan-European measure.

Separately, the German consumer price index reading was 8.6 per cent, down from 10 per cent in November. «Headline inflation is still likely to decline rapidly in March, but we think the core rate, which probably rose in December, will end the year well above 2 per cent,» she added.

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  1. Brooke4 January 2023 at 13:09

    The German government has had a good reaction to this crisis until now. Let's see what they do next but I wasn't expecting consumer price inflation to be this low in January.

    ReplyDelete
    Replies
    1. Ali4 January 2023 at 19:36

      It's about time they took some good measures considering the mistakes they did with Russia (relying on it so heavily for gas).

      Delete

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