German Inflation Falls to the Lowest Level in More Than Three Years

Consumer Prices Rise by Only 5.1% in January, Offering Some Relief

German inflation has fallen to its lowest level in more than three years, offering some relief to consumers who have been struggling with rising prices. Consumer prices rose by only 5.1% in January, down from 5.7% in December, according to data released by the Federal Statistical Office.

Energy Prices Continue to Decline

The decline in inflation is largely due to falling energy prices. The cost of energy fell by 8.6% in January, compared to a rise of 26% in the same month last year. This is the first time that energy prices have fallen since the start of the war in Ukraine.

Food Prices Still Rising

However, food prices continue to rise, albeit at a slower pace. The cost of food rose by 2.3% in January, compared to a rise of 3.2% in December. This is still significantly higher than the overall inflation rate.

Central Bank to Continue Raising Interest Rates

Despite the fall in inflation, the European Central Bank is expected to continue raising interest rates in an effort to bring inflation back to its target of 2%. The ECB has already raised interest rates five times since July, and is expected to raise them again at its next meeting in March.

Economy Expected to Slow

The fall in inflation is likely to be a welcome relief for consumers, but it is also a sign that the economy is slowing down. The German economy is expected to grow by only 0.5% in 2023, down from 2.6% in 2022. This is due to a number of factors, including the war in Ukraine, the global energy crisis, and rising interest rates.