Inflation for Germany’s consumers in 2024 was significantly more moderate than in the previous three years – despite an increase at the end of the year. On an annual average, consumer prices rose by 2.2 percent, as calculated by the Federal Statistical Office.
In 2022 (6.9 percent) and 2023 (5.9 percent), Germany had to cope with the highest inflation rates since reunification. Energy and food in particular rose sharply in price after the start of the Russian war of aggression against Ukraine in February 2022. The inflation rate was also much higher in 2021, at an average of 3.1 percent.
Inflation rises significantly in December
However, in December of the year that just ended, inflation continued to rise to 2.6 percent. Last year, the inflation rate was only higher in January at 2.9 percent. Price drivers were services and food, while energy became cheaper again. From November to December 2024, consumer prices rose by 0.4 percent.
In October, the annual rate rose to 2.0 percent after two months of falling values, and at 2.2 percent, November brought a value above the two percent mark for the first time since July 2024.
Inflation is likely to remain above the two percent mark for the time being
Economists expect that the inflation rate will initially remain above the two percent mark into the new year. Among other things, the increase in the CO2 price for gasoline, heating oil and gas as well as the increase in the price of the Germany ticket are likely to drive inflation.
However, no expert is expecting another wave of inflation like in 2022 and 2023, when the inflation rate in Europe’s largest economy climbed to almost nine percent. Instead, economists expect an annual inflation rate for the whole of 2025 at the level of 2024. The Advisory Council for the Assessment of Overall Economic Development (“Economy”) assumes average inflation of 2.1 percent. The Ifo Institute expects inflation to average 2.3 percent in 2025.
Higher inflation rates reduce the purchasing power of consumers, who can afford one euro less. People’s financial freedom is shrinking and income growth is being eaten up by inflation.
Services and food once again drive up prices
In December, services such as visits to restaurants, plane tickets and insurance were once again among the drivers of inflation: they rose in price overall by 4.1 percent (November: 4.0 percent). People in Germany had to pay 2.0 percent more for food than a year before. This meant that the price increase increased somewhat here again.
Refueling and heating were cheaper in December than a year earlier: overall, energy was 1.7 percent cheaper compared to December 2023. In November, prices for these products were 3.7 percent below the level of the same month last year. Energy price developments therefore dampened the inflation rate less than in previous months.
Excluding the volatile prices for energy and food, the statisticians calculated an inflation rate of 3.1 percent for December. This core inflation reflects basic inflation and, in the opinion of many economists, represents the inflation trend better than the overall rate. (dpa)