Consumer prices: Inflation rate drops – food prices hardly rise anymore

Cheaper energy and hardly any price rising in food: inflation in Germany has significantly reduced at the beginning of the year. In January, goods and services increased by 2.3 percent in the previous year, as the Federal Statistical Office announced and thus confirmed an initial estimate. It was the first decline in inflation after three climbs in a row. In December the rate was 2.6 percent. Measured on the previous month, consumer prices fell by 0.2 percent.

Food prices hardly rise anymore

An important reason for the abbey of inflation is hardly rising prices for food that has been rapidly expensive in recent years. In January, food cost only 0.8 percent more than a year earlier, in December there was still an increase of 2.0 percent.

Nevertheless, some foods cost significantly more than a year ago: Butter was almost a third (plus 32.6 percent). Consumers also had to pay more for dairy products and eggs (plus 2.7 percent). Vegetables, on the other hand, became cheaper (minus 2.3 percent), the prices for meat remained unchanged on average.

Electricity and heating oil cheaper

The decline in inflation also contributed cheaper energy, which was 1.6 percent cheaper than a year earlier. Both fuels (minus 0.1 percent) and for budgetary energy (minus 2.5 percent) became cheaper. Consumers benefited from lower prices for light heating oil (minus 1.2 percent) and electricity (minus 3.6 percent).

Natural gas (plus 0.5 percent) and district heating (plus 9.8 percent) were more expensive than a year earlier. “There are also reasons for the price development in January 2025 to increase CO2 prices, the increased electricity levies and the increased gas network charges,” said the statisticians.

Car repairs and restaurant visits more expensive

On the other hand, the price increase for services continues, they were increasingly above average at 4.0 percent. Insurance companies (plus 9.9 percent), maintenance and repairs of cars (5.7 percent) and restaurant visits (plus 4.7 percent) became significantly more expensive at the beginning of the year. The net rent also rose by 2.0 percent.

The wave of inflation after the Russian attack on Ukraine in February 2022 has broken: 2023 consumer prices in Germany had risen by average by 5.9 percent. However, people feel the increased prices in everyday life, for example when buying food or energy costs.

Feeling inflation much higher

In addition, many people strongly overestimate the increase in consumer prices, as a survey by the Institute of German Economy (IW) shows. On average, the respondents stated that the inflation rate in 2024 was 15.3 percent – in fact it was only 2.2 percent. The skepticism of statistics is also high: According to the IW, around half is certain that prices that are above the official inflation rate is certain.

Economists expect the inflation rate over the 2.0 percent mark in the coming months. A year, they expect a rate of over two percent, a level similar to 2024.