afp/rtr/dpa | Consumer prices rose at the same rate last year as in the previous year. The average Inflation rate As in 2024, it was 2.2 percent, as the Federal Statistical Office in Wiesbaden announced on Tuesday.
In December the inflation rate fell surprisingly significantly to 1.8 percent. Inflation was 2.3 percent in October and November, after reaching an annual high of 2.4 percent in September.
The Federal Statistical Office calculates every month how prices have developed for consumers. To do this, the statisticians note down in stores how much fruit and vegetables, shoes and furniture cost. How much is the rent for the apartment and how much does gas cost at the gas station? Thousands of individual prices of goods and services are recorded representatively according to the same pattern. Some of the prices are also collected online.
Price pressure in December was primarily caused by more expensive services, including car insurance, package holidays and visits to the hairdresser and restaurants, while energy became cheaper. Food also hardly became more expensive.
Similar levels expected for 2026
Economists expect the inflation rate to remain above the 2 percent mark in 2026. However, no expert expects prices to rise rapidly like in 2022 and 2023 after the Russian attack on Ukraine. According to a forecast by the Ifo Institute, the inflation rate is likely to be 2.2 percent this year and 2.3 percent in 2027.
The asset manager HQ Trust does not see any significant relief for consumers with a view to 2026. Chief economist Michael Heise lists: “The network fees for electricity consumers will be reduced, the gas storage levy will no longer apply and the sales tax on food in the catering industry will be reduced. However, the expected price increases will increase Increase in CO2 tax and the price increase for the so-called Germany ticket.”
Chief economist Carsten Brzeski from the ING bank sees an inflation rate of less than 2 percent for at least the first few months of the current year, due to the strong euro and cheaper imports, as US tariffs mean that goods are being redirected to Europe at dumping prices. The VAT reduction for food, on the other hand, is more likely to benefit innkeepers.
In December, services rose noticeably by 3.5 percent. The reason for this is usually increased wages that companies pass on to customers. Economists expect that the increase in the minimum wage on January 1st will also drive up prices.
Food prices were 0.8 percent higher than in the same month last year; the value is well below the general inflation rate. Butter, for example, has recently become cheaper. However, when doing their daily shopping, people notice that overall food prices are significantly higher than they were a few years ago.
Inflation felt much higher
Higher food prices in particular are a worry for manyshows a representative Forsa survey commissioned by the Federal Association of Consumer Organizations (vzbv). According to this, 58 percent of people are worried about the rising cost of living and the financial situation of their household.
There is at least some relaxation in energy prices: according to statistics, fuel, electricity and gas were 1.3 percent cheaper in December than a year before.
Core inflation, which economists pay particular attention to, excluding the volatile prices for food and energy, fell to 2.4 percent in December. It therefore remains slightly elevated.
The higher the inflation rate, the less people can afford. The price wave that hit Germany after the Russian attack on Ukraine has ended. At that time, energy and food prices rose rapidly. This caused the inflation rate to skyrocket to 6.9 percent on average in 2022 and 5.9 percent in 2023 until it normalized in 2024.
However, inflation feels much higher: in a survey by the German Economic Institute (IW), participants estimated the inflation rate in 2024 to be 15.3 percent – around seven times higher than it actually was.
Wages are rising faster than inflation
After all, rising wages and subdued inflation mean that many people have more money in their pockets again. Wages have been growing after deducting inflation for more than two years.
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.
Dekabank chief economist Ulrich Kater sees inflation in Germany at 2.2 percent for the year as absolutely within the normal range. “Economically, the country has many problems, inflation is not one of them.”