Energy is also becoming cheaper: food prices are pushing down inflation

Energy is also becoming cheaper
Food prices depress inflation

Listen to article

This audio version was artificially generated. More info | Send feedback

Inflation in Germany is falling to its lowest level in the past three years. The developments in energy and food prices are primarily responsible for this. One sector in particular is giving way in particular.

Falling food and energy prices pushed Germany’s inflation rate to its lowest level in almost three years in March. Consumer prices only rose by 2.2 percent compared to the same month last year, as the Federal Statistical Office confirmed an earlier estimate. An even lower value was last measured in April 2021 at 2 percent. In February the inflation rate was 2.5 percent. From February to March prices rose by 0.4 percent.

“The price situation for energy and food dampened the inflation rate for the second month in a row,” said the President of the Federal Statistical Office, Ruth Brandt. Food prices fell for the first time in over nine years: they fell by 0.7 percent compared to March 2023, after rising by 0.9 percent in February. Fresh vegetables in particular became cheaper: they cost a fifth less than a year ago. Dairy products were 5.5 percent cheaper. On the other hand, sugar, jam, honey and other confectionery (plus 8.4 percent), fruit (plus 4.2 percent) and bread and grain products (plus 3 percent) became more expensive. Consumers even had to pay 54.1 percent more for olive oil.

Energy is becoming cheaper

Energy prices fell by an average of 2.7 percent – despite the expiry of price controls (February: minus 2.4 percent). Firewood, wood pellets or other solid fuels (minus 10.8 percent), but also natural gas (minus 9.2 percent) and electricity (minus 8.1 percent) were no longer so expensive. District heating, on the other hand, cost 20.6 percent more. Fuels such as gasoline also rose in price, by 0.3 percent. For light heating oil, the surcharge was 0.4 percent. 3.7 (February: 3.4) percent more were charged for services. Core inflation – which excludes energy and food prices – fell slightly to 3.3 percent.

However, economists are not yet giving the all-clear. Oil prices on the world markets have recently risen significantly, which can also be felt at the petrol pumps in Germany. In addition, in April the VAT rate on gas and district heating was raised from the temporary seven percent back to the old level of 19 percent, which is likely to make these energy products more expensive. Economists also expect that significant wage increases will cause many service providers to noticeably raise their prices in the future.

The German inflation rate, calculated according to European standards, was 2.3 percent in March, only just above the level of two percent targeted by the European Central Bank (ECB). This gives the monetary authorities the opportunity to lower their key interest rate for the first time in June. It is currently at a record level of 4.5 percent.

source site-32