The inflation rate in Germany rose to 3.3 percent in September. The Federal Statistical Office in Wiesbaden announced this on Wednesday based on an initial estimate. In August the rate was 2.9 percent, after 2.8 percent in July and 2.3 percent in June.
Energy prices continue to be the key driver of inflation, although not entirely exclusively. Over the year they increased by 14.9 percent, food by 0.4 percent, goods by 3.8 percent and services by 2.7 percent. Core inflation, which is inflation excluding energy and food, was 2.4 percent, as in the previous month.
The fuel discount is likely to bring about a certain temporary dampening of inflation in Germany from October onwards. At least that was the case with the previous temporary energy tax cut in the months of May to June. After that, inflation rose again to levels similar to the average for the euro countries. The first effects are likely to be seen at gas stations on Thursday. “The fuel discount is likely to dampen inflation again by around 0.3 percentage points in October,” said Holger Schmieding, chief economist at the Hamburg bank Berenberg.
The figures from North Rhine-Westphalia, which have already been published in more detail and are mostly relatively representative of the whole of Germany, reveal exactly what has become more expensive or cheaper. The decisive factor in inflation continues to be everything that depends on oil as an energy source. Heating oil became 49.9 percent more expensive over the year. Diesel prices rose by 48.7 percent and gasoline by 33.8 percent. The average fuel price increase was 36.9 percent.
There is apparently a special effect with regard to natural gas. World market prices, like oil, have risen sharply. For existing customers in Germany, however, unlike new customers, this only occurs gradually. In addition, the abolition of the gas storage levy at the turn of the year provided some relief there. According to the statisticians, the price fell by an average of 1.9 percent over the year.
For food, inflation is on average close to zero, even if individual foods have risen sharply in price. Although wheat, for example, has become significantly more expensive on international markets, bread prices only rose by 0.1 percent compared to the same month last year and the previous month. Adjusted for inflation, they fell.
An explanation: The price of grain makes up a relatively small proportion of the total cost of bread. There is also much to suggest that people are saving elsewhere due to the high energy prices - and that companies are therefore not so easily able to pass on the additional costs to consumers in the form of higher prices.
However, certain groups of food became significantly more expensive. Prices for vegetables rose by 11.2 percent over the year. Poor harvests due to drought appear to play a role in this development. The south, the southwest and parts of eastern Germany in particular suffered from significant losses and sometimes severe crop failures.
Fish prices rose by 5.3 percent over the year. For example, cooking fats became cheaper by 16.5 percent, dairy products and eggs by 4.5 percent and fruit by 2.9 percent.
Prices for hotel accommodation only rose by a below-average 2.3 percent. That was more than that. Eating out in a restaurant became more expensive by 3.2 percent. Insurance premiums, which had been driving inflation for a long time, only rose by 1.8 percent. Inflation in nursing care remains high: social facility services rose in price by an average of 6.2 percent.
Inflation has also increased significantly in other euro countries. In France, which had had relatively low rates for some time due to political intervention, inflation rose from 2.6 to 3.4 percent in September. That was the highest level in more than two years. In Italy the rate increased from 3.2 to 4.1 percent. In Spain it rose from 4.6 to 5.0 percent. That was an even higher figure than economists had expected.
For more than half a year, inflation rates in Germany and the euro area as a whole have been above the European Central Bank's (ECB) target of two percent. The ECB raised key interest rates by 0.25 percentage points in June and September. The most important key interest rate, the deposit rate, is now 2.5 percent.
The central bank's next interest rate decision is on October 29th. On the financial markets it is considered likely that the central bank will not do anything but will raise interest rates again in December. However, an interest rate increase in October cannot be completely ruled out.
ECB President Christine Lagarde said in Brussels that the central bank wanted to react “with a sense of proportion”. Inflation is moving on a “medium” path, which only requires moderate interest rate increases from the ECB: “At this point in time, we see no evidence that energy prices are being transferred to wages.”
