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Hustle and bustle in a shopping centre in Leipzig's city centre: inflation continues to fall steadily

Photo: Jan Woitas / dpa

Inflation in Germany continues to decline due to lower energy prices. The annual inflation rate was 3.8 percent in October, according to the Federal Statistical Office on the basis of provisional figures. It was the lowest value since August 2021, when it was also 3.8 percent. In September, consumer prices had risen by 4.5 percent compared to the same month last year and by 6.1 percent in August. At the beginning of the year, there was even an eight before the decimal point.

Energy cost 3.2 percent less than a year earlier. However, according to preliminary data, food prices also rose at an above-average rate in October (plus 6.1 percent). Significantly higher prices are a burden for consumers. People can afford less for their money. This is slowing down private consumption, which is an important pillar of the German economy.

Many people have recently been forced to do without. In a recently published survey commissioned by the German Savings Banks and Giro Association, 71 percent of the more than 4800,2022 respondents said they had to do without to a lesser or greater extent because of the high prices. This is six percentage points more than in <>. Consumer prices were unchanged in October compared with September.

Economists expect inflation to weaken further

According to economists, inflation is likely to weaken further by the end of the year. Leading economic research institutes recently expected the inflation rate to fall to 2.6 percent next year, after an expected average of 6.1 percent for the current year.

The HICP index of consumer prices, which is collected for European purposes, also fell sharply. The annual rate fell from 4.3 percent in the previous month to three percent in October. Economists had expected a rate of 3.3 percent.

The European Central Bank (ECB) has so far raised interest rates ten times in a row to combat elevated inflation in the euro area and Germany. Higher interest rates make loans more expensive, which can curb demand and counteract high inflation rates. The ECB believes that its goal of stable prices has been achieved with inflation of 2.0 percent in the euro area in the medium term.