German inflation continues to be at low level owing to drop in energy prices

Germany’s inflation rate continues to be at a low level in August. According to the Federal Statistics Office, Destatis, the country’s consumer prices dropped in sequential terms, but rose on year-on-year basis. In annual terms, Germany’s consumer prices rose 0.4 percent in August. The inflation rate gauged by the consumer price index continues to be at a lower level.  Inflation gauged by the harmonized European Union standards dropped 0.1 percent in sequential terms and accelerated 0.3 percent year-on-year.

As in the earlier months, low inflation in Germany was mainly because of the drop in energy prices, which fell 5.9 percent. Consumer gained particularly from the prices of mineral oil products that dropped in August on a year-on-year basis. Other energy products’ prices also fell year-on-year. Only exception were electricity prices that increased 0.7 percent year-on-year. Stripping energy prices, the inflation rate would have been 1.1 percent in August, stated Destatis.

Meanwhile, food prices rose 0.9 percent year-on-year, thanks to fruit and vegetable prices which rose 4.2 percent and 5.3 percent respectively. Prices of edible fats and oils also rose. Noticeable increase in price was seen in fish and fish products. On the contrary, prices of dairy products fell 6.4 percent in August.

Prices of goods dropped 0.6 percent year-on-year in August, mainly because of the fall in energy prices. In contrast to the drop in goods prices, the prices of services increased 1.3 percent in August. The development was mostly because of the rise in net rents.