On average for the year, the leading economic research institutes expect inflation to weaken significantly to 2.3 percent after 5.9 percent last year. picture alliance / SvenSimon | Frank Hoermann/SVEN SIMON
Inflation in Germany continues to weaken, with consumer prices rising by 2.2 percent in March. Energy prices fell by 2.7 percent and food prices by 0.7 percent, while services became more expensive by 3.7 percent. The Ifo Institute expects inflation to fall below two percent in the summer, and leading economic research institutes are forecasting an annual average of 2.3 percent.
Inflation in Germany has continued to weaken. In March, consumer prices were 2.2 percent higher than in the same month last year, as the Federal Statistical Office announced on Tuesday in Wiesbaden based on preliminary data. This is the lowest value since April 2021 when it was two percent. In February the annual inflation rate was 2.5 percent and in January it was 2.9 percent.
Despite the energy price brake that expired at the beginning of the year and the increase in the CO2 price to 45 euros per ton of carbon dioxide, energy prices fell by 2.7 percent in March. Consumers paid 0.7 percent less for food than a year earlier. This was the first time since February 2015 that food prices were below the level of the same month of the previous year.
Services, on the other hand, rose in price by 3.7 percent according to preliminary information. Among other things, visiting pubs and restaurants became more expensive, as shown by the data from the state statistical offices. From January 1, 2024, the regular VAT rate of 19 percent will apply again to food in restaurants. According to the state offices, the prices for package holidays and flights also rose in the Easter travel month compared to the same month last year.
Compared to the previous month of February, consumer prices rose by a total of 0.4 percent.
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The Ifo Institute expects inflation to fall further
The Ifo Institute expects inflation to fall further. Inflation is likely to fall below the two percent mark in the summer, said the economic director of the Munich Institute, Timo Wollmershäuser, on Tuesday. The latest data from economic researchers also contribute to this assessment, according to which fewer and fewer companies want to increase the prices for their products. On average for the year, the leading economic research institutes expect inflation to weaken significantly to 2.3 percent after 5.9 percent last year.
picture alliance/dpa/dpa Graphic | dpa-infografik GmbH
Nevertheless, in a survey in mid-February, many people expressed concern about further jumps in energy prices and general price increases. The vast majority (83 percent) of the approximately 1,000 respondents say they are trying to put the brakes on spending, as the Schufa survey showed. 75 percent consciously spend less when shopping. “The current survey results show that the mood in many German households remains very tense – and this is also reflected in people’s everyday consumer behavior,” explains Schufa board member Ole Schröder.
Higher inflation rates reduce the purchasing power of consumers. You can afford one euro less. That’s why many consumers turned their backs last year. Private consumption has failed to provide an important economic support.
AA/dpa