ILast year sunflower oil became so expensive – now it’s olive oil. While most vegetable oils and cooking fats rose significantly in price with Russia’s attack on Ukraine because of fears of supply bottlenecks and shortages, and are therefore now significantly cheaper than a year ago, the opposite is true for olive oil.
You notice that in the supermarket. Over the year there was a price increase of 38 percent, as reported by the Federal Statistical Office. Experts blame this on a poor harvest in the Mediterranean region, especially in Spain, which was linked to the persistent drought last year. The effect should not affect table and edible olives as much because of other varieties and distribution channels.
Karsten Junius, economist at Bank J. Safra Sarasin, cites olive oil as an example of how climate change can now have a driving effect on inflation.
3.8 percent inflation in October
Overall, however, the wave of inflation is ebbing somewhat. The inflation rate in Germany was 3.8 percent in October. The Federal Statistical Office confirmed a corresponding estimate on Wednesday.
According to the national calculation method for the consumer price index (CPI), the increase in prices compared to the previous month of September was now 0 percent. According to the European calculation method for the Harmonized Index of Consumer Prices (HICP), there was even a slight decrease of 0.2 percent compared to the previous month. “The price increase at the consumer level is currently easing somewhat,” said Federal Office President Ruth Brand. The annual inflation rate for food has continued to weaken and most energy products have even become cheaper over the year. Nevertheless, the inflation rate remains high in a long-term comparison. In particular, the rise in food prices over the long period of war and crisis “continues to be noticeable” for consumers.
Food prices rose by 6.1 percent compared to the same month last year and by 0.1 percent compared to the previous month of September. Sugar, jam, honey and other confectionery rose in price by 13.4 percent over the year. Bread became 10.9 percent more expensive, fruit 9.6 percent, fish 8.6 percent.
The prices for energy products in October 2023 were 3.2 percent below the level of the same month of the previous year and thus dampened the inflation rate. In September, energy inflation was still at plus 1.0 percent. Heating oil became 28.2 percent cheaper over the year and natural gas 13 percent. Fuel prices fell by an average of 7.7 percent, diesel more than premium gasoline. Electricity, on the other hand, rose in price by 4.7 percent. The core rate of inflation, which is price increases without the strongly fluctuating prices for energy and food, fell from 4.6 to 4.3 percent.
What’s next in November?
Most economists’ forecasts predict a further decline in the inflation rate in Germany for the current month of November. “In November, inflation in Germany is likely to have fallen further somewhat – to an estimated 3.5 percent,” said Jörg Krämer, chief economist at Commerzbank. Energy prices, which are likely to have fallen slightly compared to October, contribute to this. Inflation will then rise again in December – to an estimated 4.2 percent. This is due to a so-called statistical base effect: In December 2022, the state took over the advance payments for gas and district heating, which lowered the price level at the time: “Compared to the previous year, there will be a significant increase in prices for December of this year.”
In any case, the International Monetary Fund (IMF) warns against prematurely declaring that the battle against inflation in Europe has been won. “Monetary policy is appropriately restrictive and must remain so in 2024,” said the head of the IMF’s European department, Alfred Kammer, on Wednesday. He warned the European Central Bank (ECB) not to cut interest rates too early. The central bank paused interest rates in October after ten interest rate increases in a row. The ECB deposit rate, which also has some impact on savings interest rates, is 4 percent.
#pitfalls #inflation