Fuel discount: Inflation fell in October

The fuel discount significantly reduced German consumer prices in October: the inflation rate fell to 2.8 percent after 3.3 percent in September. The Federal Statistical Office announced this based on preliminary data.

The federal government implemented the discount for the second time this year despite widespread criticism from experts: from October 1st to the end of 2026, the energy tax on gasoline and diesel will be reduced by around 14 cents per liter. According to government figures, VAT would result in relief of up to 17 cents per liter.

Although inflation has fallen, it is too early to give the all-clear, said Commerzbank chief economist Jörg Krämer, according to the dpa news agency. The massive increase in energy prices is likely to gradually make other goods and services more expensive. “Inflation will probably be above three percent again at the turn of the year,” he predicts.

Other experts also expect inflation to remain elevated for the time being: the conflict between the USA and Iran, which has been driving up energy prices since the end of February, is still not resolved. “The increase in energy prices is likely to remain at a very high level despite the temporary reintroduction of the fuel discount for the months of October to December,” says the Bundesbank’s monthly report.

Compared to October last year, consumers had to pay 12.2 percent more for fuel and household energy this month. However, price inflation slowed after almost 15 percent in the previous month, according to the report.

Food was also 0.4 percent more expensive in October than a year earlier. Services rose in price by 2.5 percent, again less than in previous months. These include, among other things, package tours and restaurant visits.

Energy has been the main driver of inflation for months – and not just in Germany. In September, the inflation rate in Germany climbed to its highest level since December 2023. In the euro area, too, the highest value in three years was reached in September at 3.8 percent. The European Central Bank (ECB) is aiming for 2.0 percent inflation in the euro area in the medium term.