Inflation in Germany has decelerated noticeably, falling to its lowest level since August 2021. The increase in consumer prices in October 2023 amounted to an annual rate of 3.8 percent, according to preliminary data from the Federal Statistical Office (Destatis).
According to the methodology used by Destatis inflation in Germany in October 2023 it decreased to 3.8%. This is the lowest level since August 2021. The consumer price index (CPI) in September was 4.5% on an annual basis. According to preliminary data, month-to-month inflation should remain unchanged.
The office pointed out that the decline contributed to further deceleration of inflation in October energy prices by 3.2 percent compared to the situation last year. “This was due to the base effect resulting from the very high level of energy prices in the previous year,” it added.
This is the first such decline since January 2021. Then energy prices dropped by 2%. compared to January 2020. On the other hand, food prices were still 6.1% higher in October 2023. than last year.
Core inflation – excluding food and energy prices – fell to 4.3 percent in October. with 4.6 percent in September.
The Harmonized Index of Consumer Prices (HICP) increased by 3% in October 2023. Every year. Harmonized consumer price indices are calculated by member countries according to the unified methodology of the European Union.
Interest rate cuts in the euro zone?
ING Bank Śląski economists expect that they may start in mid-2024 interest rate cuts in the euro zone.
“The annual HICP inflation in Germany slowed down to 3% in October, the lowest since June 2021. Food and fuel prices are slowing down. By the end of the year, it should slow down to more than 0.5 pp. The ECB has already ended the cycle of rate increases, falling inflation and poor economic conditions suggest that the reductions will start in mid-2024,” ING Bank Śląski economists wrote in a commentary.
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