Inflation rate dropped significantly to 6.1 percent
Inflation weakened significantly in May: As the Federal Statistical Office in Wiesbaden announced on Wednesday in an initial estimate, inflation this month was expected to be 6.1 percent year-on-year. WELT economics expert Dietmar Deffner talks about the background.
Consumer prices in Germany rose more slowly in May than they have in more than a year. Above all, the falling energy and petrol prices and the introduction of the 49-euro ticket provided relief. In some areas, however, price pressure remains high.
DThe German inflation rate in May is due to falling petrol prices and the Introduction of the 49-euro ticket fell to its lowest level in more than a year. The consumer prices were on average 6.1 above the level of the same month last year, as reported by the Federal Statistical Office. This is the lowest value since March 2022. In April, the inflation rate was still 7.2 percent. Economists surveyed by the Reuters news agency had only expected a decline to 6.5 percent.
The provided relaxation Development of energy prices: These only rose by an average of 2.6 (April: +6.8) percent, with refueling even becoming cheaper in many federal states. The 49-euro ticket for local public transport introduced at the beginning of the month also dampened inflation, as it lowered the transport costs for the more than ten million buyers. Food prices rose again significantly by 14.9 percent, but not as much as in April with 17.2 percent. Services cost an average of 4.5 percent more than a year earlier (April: +4.7 percent).
Package holiday providers are passing higher costs on to consumers
In some areas, however, price pressure remains high. Package tours, for example, rose in price by 13.6 percent in Bavaria and Saxony. “It turns out that after the pandemic, Germans want to enjoy life again and really go on vacation despite tight budgets,” said Holger Schmieding, chief economist at Berenberg Bank. “This makes it easier for providers to pass on higher costs to consumers in these areas.”
Experts do not rule out that the inflation rate will rise again. “It will then become more complicated in the coming months,” said ING chief economist Carsten Brzeski. “Because then we get base effects from the 9-euro ticket and fuel discount, which increases inflationary pressure again.” Both were introduced by the federal government for June, July and August 2022 to relieve the burden on citizens. At the same time, gas prices are extremely low, while price pressure in the industry is easing significantly. “However, the service sector is still very inflationary,” said the ING chief economist. The inflation rate could therefore move towards seven percent again in the summer before dropping to a good four percent by winter.