Stronger price increases at the beginning of the year

Stronger price increases at the beginning of the year

Consumer prices rose sharply again at the beginning of the year. The federal statistical office confirmed preliminary estimates for january, according to which the inflation rate was 1.7 percent above the value for the same month of the previous year.

In december 2019 the rate had been 1.5 percent and in november 1.1 percent. Higher energy prices in particular were responsible for the overall increase. Excluding this, the price increase was only 1.5 percent. Other price drivers included meat (+6.2 percent), fruit (+6.0 percent) and electricity, which was 3.9 percent more expensive than a year earlier. Falling prices for package tours and education expenses had a steaming effect.

The inflation rate is an important indicator for the monetary policy of the european central bank (ECB). The central bank is aiming for an annual tax rate of just under 2.0 percent for the euro zone as a whole, with its 19 countries, in the medium term – far enough away from the zero mark. Because permanently low or broadly declining prices could tempt companies and consumers to postpone investments. This may slow down the economy.

Compared with the previous month of december, consumer prices fell by 0.6 percent overall. This value was also confirmed by the statisticians. The HICP price index for germany, which is calculated for european comparative purposes and used by the ECB for its monetary policy, was 1.6 percent higher in january than in the same month of the previous year.

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