Inflation is on the decline. After rates of more than eight percent at the beginning of the year, there is now a three before the decimal point. However, high food prices continue to cause problems for consumers.
Inflation in Germany weakened further in November. Consumer prices were 3.2 percent above the level of the same month last year, after 3.8 percent in October, as the Federal Statistical Office announced on Wednesday in Wiesbaden based on preliminary figures. It was the lowest level since June 2021 at 2.4 percent. The price increase has now decreased significantly. In September the annual inflation rate was 4.5 percent and in August it was 6.1 percent. At the beginning of the year there was even an eight in front of the decimal point.
Energy cost 4.5 percent less in November than a year earlier. According to preliminary data, food prices rose above average by 5.5 percent. However, the increase was no longer as strong as in previous months. Significantly increased 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.
Consumers are buying less
In a recently published survey commissioned by the credit agency Schufa, 74 percent of around 1,000 respondents said they consciously spend less money when shopping. “People have adapted their consumer behavior to the increased prices, they are simply buying less,” said Schufa board member Ole Schröder.
At least consumers’ spending mood brightened somewhat in time for the Christmas shopping season, as shown by the latest consumption study by the Nuremberg consumer research company GfK and the Nuremberg Institute for Market Decisions (NIM). However, the level remains very low in long-term comparison and there are no signs of a sustainable recovery in the coming months. “The mood is still characterized by uncertainty and worries,” said NIM consumer expert Rolf Bürkl.
According to preliminary data, consumer prices fell by 0.4 percent compared to the previous month of October.
Energy efficiency
Save energy when streaming: With these tricks you can do it
Further decline in inflation expected in 2024
Economists expect inflation to continue to fall. The Advisory Council for the Assessment of Overall Economic Development assumes an average inflation rate of 2.6 percent in the coming year.
The economic research institute Ifo also sees decreasing price pressure. The inflation rate is likely to temporarily rise to around 4 percent in December. Above all, there is a base effect here. Last year, the state covered the one-time cost of the December deduction for gas and district heating customers. “But at the beginning of next year the inflation rate will fall to below 3 percent,” predicted Ifo economics chief Timo Wollmershäuser.
Source: Stern
