German inflation remains high at start of year

Germany’s inflation rate showed no signs of easing at the start of the year, as energy and food price pressures remained high due to the war in Ukraine.

German consumer prices, harmonised to compare with other European Union countries, rose by 9.2 per cent on the year in January, data from the federal statistics office showed on Wednesday (Feb 22).

Compared with December, prices increased by 0.5 per cent, it added, confirming preliminary data on both a monthly and annual basis.

According to non-harmonised standards, German consumer prices rose 8.7 per cent on the year in January and 1.0 per cent on the month. This follows revised inflation rates of 8.1 per cent in December and 8.8 per cent in November.

“Following a slowdown at the end of last year, the inflation rate thus remains at a high level,” said Ruth Brand, president of the German statistics office.

Commerzbank’s chief economist Joerg Kraemer said that following the methodological revision of the inflation basket, “there has been no clear downward trend in inflation since the autumn.”

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For the economist, it is far too early to sound the all-clear on the inflation front. “The European Central Bank should continue to raise its key interest rates decisively,” he said.

Households paid higher prices in particular for energy and food in January, Brand said.

Energy product prices were 23.1 per cent higher year-on-year despite government relief measures. Excluding energy prices, the inflation rate stood at 7.2 per cent in January. Food prices increased 20.2 per cent on year. “The rate of food price increase thus was more than twice the overall inflation rate again,” the statistics office said.

“We are observing price rises for many goods and, to an increasing degree, also for services,” Brand said. Prices of goods were up 12.7 per cent on year in January and services prices increased 4.5 per cent on year.

The statistics office offers a breakdown for January on its website. REUTERS