Inflation in Germany remains stubbornly above the two percent mark.
In November, consumer prices were 2.3 percent higher than in the same month last year – as in October. The Federal Statistical Office announced this based on preliminary figures. While services are becoming more expensive, food prices are only rising slowly. However, there is also little relief for consumers through cheaper energy.
Inflation has now been above the symbolically important mark of two percent for the fourth month in a row, comments Sebastian Becker, economist at Deutsche Bank – “and this despite clouded consumer sentiment and a weak economy.”
The decline in inflation remains a tough process, says Michael Heise, chief economist at the Bad Homburg asset manager HQ Trust: “Consumers will probably have to wait a few more months to get some relief.”
Rising wages: People have more money at their disposal
The higher the inflation rate, the lower people’s purchasing power: they can then afford less for one euro. The price wave that hit Germany after the start of Russia’s war of aggression against Ukraine has ended. At that time, energy and food prices rose rapidly, causing the inflation rate to skyrocket to 6.9 percent (2022) and 5.9 percent (2023). For this year, economic research institutes expect a moderate inflation rate of 2.1 percent – similar to 2024.
After all, rising wages and subdued inflation mean that many people have more money in their pockets again. In the third quarter, real wages, i.e. gross wages minus inflation, rose by 2.7 percent compared to the same period last year, reported the Federal Statistical Office – “the highest increase so far this year”. According to calculations by the trade union Hans Böckler Foundation, real wages have made up for the losses in purchasing power in recent years.
Price levels remain elevated
However, a significant fall in the inflation rate is not in sight at the moment. According to economists, consumers in Germany will initially have to put up with inflation rates above the two percent mark.
The inflation rate in Germany, the largest economy in the Eurozone, is of particular importance for the monetary policy of the European Central Bank (ECB). It is targeting an inflation rate of 2.0 percent for the euro area in the medium term. With such inflation, the ECB sees its most important task of ensuring stable prices fulfilled.
The Federal Statistical Office calculates how prices have developed every month.