Dhe inflation in Germany fell slightly in January. As the Federal Statistical Office in Wiesbaden announced on Monday based on an initial estimate, consumer prices rose by an average of 4.9 percent compared to the same month last year.
In December, the inflation rate was 5.3 percent. That was the highest value since 1992, when the boom after reunification caused high inflation rates. Regionally, there were clear differences in inflation from federal state to federal state.
Many economists had expected a stronger fall in the inflation rate at the turn of the year. Entire theories were based on this, and many had consoled themselves with it over the past year about the high rates. On average, the forecasts had predicted that the rate would now drop from 5.3 to 4.3 percent. The most important reason why this apparently did not happen after all: “Energy, electricity and gas have become much more expensive,” said economist Holger Schmieding: “Even for fuel, the annual rate has only decreased slightly.”
The most important argument for an expected decline in the inflation rate in January was value added tax. The tax was reduced in the course of the pandemic from July to December 2020. As a result, in the past few months from July to December 2021, prices with the higher tax were always compared with those from the previous year with the lower tax. That had artificially pushed inflation rates up. This effect disappeared at the turn of the year. Many economists had therefore already expected noticeably lower inflation rates at the beginning of the year.
On the other hand, the further increase in the CO2 price on petrol and heating oil made energy even more expensive in the new year. In any case, many economists expect that climate policy will increasingly be seen in higher inflation rates.
Energy, electricity and gas are becoming significantly more expensive
There is a “#TeamTransitory” among economists who believe that the high inflation rates are only temporary. This team can’t glean much confirmation from the January figures yet. The “TeamPersistent”, on the other hand, which believes that inflation is here to stay, can perhaps be confirmed by the fact that certain special effects such as value added tax, which are excluded from the inflation measurement, are largely offset by other factors.
Details on everything that has become more expensive are revealed by the figures from the state statistical offices, which have already been published more precisely than the figures at federal level. The figures from North Rhine-Westphalia show: Heating oil continued to rise particularly sharply, the price rose by 35.6 percent compared to the same month last year, electricity was 17.1 percent more expensive, diesel 26.1 percent and petrol 21 percent. Prices for vegetables (9.3 percent), dairy products (6.4 percent) and bread (6.1 percent) also rose, as did meat, fish and fruit.
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