Consumer prices
Exploitation dropped – but not with food
In March the price pressure on consumers subsided. However, this cannot be felt when purchasing food. And further development in inflation has become more uncertain.
Life in Germany was no longer as expensive in March as in the months before. However, food prices were above average. In total, consumer prices in Germany were 2.2 percent above the level of the previous year, as the Federal Statistical Office confirmed preliminary information.
In January and February, the annual inflation rate was still 2.3 percent, in December it was 2.6 percent. Higher inflation rates reduce people’s purchasing power because they can then afford less for one euro.
Falling prices in Europe because of Trump’s customs duties?
As is going on with inflation, US President Donald Trump has become more uncertain with the confrontational customs policy: escalating trade conflicts could make products from American production in Europe more expensive. On the other hand, manufacturers from China could, for example, push more into the European market to avoid US tariffs.
“Some prices could fall because the competition is increasing,” said Marcel Fratzscher, President of the German Institute for Economic Research (DIW) “Tagesschau24” last week. “So we don’t have to worry about that we have a high inflation or price increase in Germany.”
Prize driver food
In March, people in Germany had to pay 3.0 percent more than a year ago – 0.1 points more than initially estimated. This further accelerated the price bullet for purchasing in the supermarket, and in February there was already a jump to 2.4 percent. Only a few product groups were a little cheaper than a year earlier, such as fish and seafood. However, there were significantly price increases in basic foods such as food fats and oils (+9.2 percent), fruit (+5.7 percent) and vegetables (+5.3 percent) as well as for dairy products and eggs (+4.1 percent).
Some relaxation for service prices
The prices for services as visits to the restaurant were not quite as strong. In March they were 3.5 percent above the level of the previous year. A permanent reduction in VAT for food in restaurants and restaurants from 19 to 7 percent should provide further relief according to plans from the Union and the SPD. For this, the industry would have to pass on this tax advantage to customers and reduce prices on the menu.
Fueling and heating was also cheaper in March than a year earlier: energy was reduced by 2.8 percent. In the three months earlier, energy prices were 1.6 percent at the previous year. After the Russian attack war against Ukraine in February 2022, the prices for energy, but also for food, rose rapidly.
Many economists expect that the inflation rate in Germany will decrease over the course of the year – if not quite as quickly as hoped. According to the latest assessments by the Munich IFO Institute from the end of March, the inflation rate in the coming months is likely to be largely more than two percent and thus just above the target brand of the European Central Bank. The BVR banking association considers it possible that the billion -dollar package for defense and infrastructure decided by the Bundestag and the Federal Council will lead to more inflation.
Federal Statistical Office for Inflation Rate 3/2025
dpa
Source: Stern
