Consumer prices: Inflation rate is rising again – no wave of inflation

Above-average price increases for services and food made life in Germany more expensive in October than in previous months. Overall, consumer prices were 2.0 percent higher than in the same month last year, as confirmed by the Federal Statistical Office. From September to October 2024, consumer prices rose by 0.4 percent.

After two months of falling inflation rates to 1.6 percent in September, this trend has ended for the time being. Economists assume that inflation in Germany will continue to rise at a moderate level until the end of the current year. However, none of the experts expect a new wave of inflation like in 2022. At that time, energy had become so expensive as a result of Russia’s war against Ukraine, and as a result the inflation rate in this country had climbed to almost nine percent.

Price driver services

In October of the current year, services and food were the main price drivers. The prices for services such as visits to restaurants, package tours or car repairs rose by a total of 4.0 percent within a year. Economists explain this with rising wage costs, which are severely affecting companies in the service sector. “Since wages have increased significantly until recently, the weak economy is likely to slow prices in the coming months and thus gradually push down the price increase in services,” predicts Commerzbank chief economist Jörg Krämer.

Price increases for food have also increased: after 1.5 percent in August and 1.6 percent in September, consumers had to pay 2.3 percent more in October than a year earlier. Edible fats and oils in particular were noticeably more expensive in October of the current year (plus 21.3 percent). Butter, for example, rose in price by 39.7 percent, according to the Wiesbaden statisticians.

Fuel and heating oil cheaper

Refueling and heating were cheaper than a year earlier: Overall, energy products were 5.5 percent cheaper compared to October 2023. In September, however, prices for these products were 7.6 percent below the level of the same month last year. Energy price developments therefore dampened the inflation rate less than in previous months.

Economists: Inflation still within limits

Dekabank chief economist Ulrich Kater points out that prices in Germany “continue to only rise within the framework of the European Central Bank’s target”. The euro currency watchdogs are aiming for a stable price level of 2.0 percent inflation for the entire euro area in the medium term – far enough away from the zero mark. Because permanently low prices are considered a risk to the economy: companies and consumers could then postpone investments in the hope that things will soon become even cheaper. According to calculations by the Federal Statistical Office, the harmonized consumer price index (HICP), which the ECB uses for its monetary policy, was 2.4 percent in Europe’s largest economy, Germany, in October.

Federal Statistical Office: Inflation 10/2024 Federal Statistical Office on consumer prices