Germany – Inflation on the retreat

According to the first estimate by the Federal Statistical Office, the inflation rate in Germany fell considerably from 3.8% to 3.2% in November.

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Dr. Ralph Solveen

Commerzbank Economic Research

November 16 2023

According to the first estimate by the Federal Statistical Office, the inflation rate in Germany fell considerably from 3.8% to 3.2% in November, continuing its downward trend. The decline in November is primarily due to a significantly lower core inflation rate, while the contribution from energy and food was limited. In the next two months, the inflation rate is likely to be slightly higher again due to a number of special effects. In the somewhat longer term, the decisive factor will be the extent to which companies are able to pass on their higher wage costs to their customers. We assume that this effect will stabilize the core inflation rate well above the ECB target in the coming year.

Good news from the Federal Statistical Office: according to its first estimate, the inflation rate in Germany fell significantly again in November. At 3.2%, it was still well above the ECB's target of 2%, but well below the October figure of 3.8% and of course much lower than the peak of almost 9% reached in the fall of last year.

In contrast to what has often been the case in recent months, the price trend for energy and food only played a subordinate role. Inflation rates for both fell comparatively moderately. The biggest contribution to the fall in the rate of inflation came from other goods and services. The so-called core inflation rate – i.e. the annual change in the price index excluding energy and food – fell from 4.3% to 3.8%.