Inflation in Germany fell below the two percent mark for the first time in about three and a half years in August. Falling energy prices contributed to this, the Federal Statistical Office announced on Thursday.
In August, prices of goods and services rose by an average of only 1.9 percent compared to the same month last year. In July, inflation had risen to 2.3 percent. The decline is mainly due to falling energy prices. “Petrol, diesel and heating oil were cheaper in August than before,” say economists at Landesbank Hessen-Thüringen.
However, services were 3.9 percent more expensive than average. “High wage agreements continue to push up service prices,” the report said. Many companies are trying to pass on the increased staff costs to customers. On average, demand for food was 1.5 percent higher than in August 2023.
“Up again”
But there is no ‘all clear’. “Unfortunately, things are looking up again from now on,” says chief economist Cyrus de la Rubia of the Hamburg Commercial Bank. In the next six to twelve months, interest rates are likely to move towards three percent. The fall in energy prices in the autumn of 2023 means that inflation will soon rise slightly again, says chief economist Holger Schmieding of the Berenberg Bank. “These are the base effects that are often mentioned.”
The European Central Bank’s (ECB) inflation target for the currency area is two percent and is therefore within sight. There is currently speculation on the financial markets that the interest rate will be cut in September.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
