Special effect Germany-Ticket
Inflation picks up again in May
29.05.2024, 14:02
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Consumer prices in Germany are rising for the first time since the beginning of the year – a development that economists expected. Two factors in particular play a decisive role in the price increase.
Inflation in Germany rose for the first time this year in May – partly due to a special effect following the introduction of the 49-euro ticket. The price of goods and services rose by an average of 2.4 percent, according to the Federal Statistical Office.
In March and April, the inflation rate was at 2.2 percent each, the lowest level in around three years. Economists surveyed by the Reuters news agency had predicted an increase to 2.4 percent for May. From April to May, the cost of living increased by 0.1 percent.
The expected rise in inflation is also due to the so-called Deutschland Ticket, said Deutsche Bank economist Sebastian Becker. It was introduced in May 2023 at a price of 49 euros per month. “The Deutschland Ticket has led to significantly lower prices in local public transport,” explained Becker.
This special effect has now expired, as the price comparison is no longer based on the previously higher costs. “Until now, the previous year’s rate had been distorted downwards by the introduction of the Germany Ticket in May 2023,” emphasized the economists at Landesbank Hessen-Thüringen (Helaba). “This effect is now no longer applicable.”
There is another driver: a higher air ticket tax has been levied since the beginning of the month. “It can be assumed that the airlines will be able to pass these costs on to passengers due to the high demand,” said Helaba.
This time, energy costs were on average 1.1 percent less (April: minus 1.2 percent) than a year earlier. Food prices rose by 0.6 percent (April: plus 0.5 percent). Services were charged 3.9 percent more (April: plus 3.4 percent). The so-called core inflation – which excludes energy and food prices – remained at 3.0 percent.
In view of the fact that inflation is no longer as strong overall, the European Central Bank (ECB) is moving towards a change in interest rates. It is likely to lower its key interest rate for the first time next week. It is currently at the record level of 4.5 percent, with which the monetary authorities wanted to curb inflation. They are aiming for an inflation rate of two percent. The German inflation rate, calculated according to uniform European standards, rose to 2.8 percent in May. “The German data is no surprise for the ECB,” said the chief economist at Berenberg Bank, Holger Schmieding. “They do not stand in the way of a first interest rate cut in June.”