Germany’s inflation rate peaked in 2022
The pace of price increases in Germany slowed in December, back to single digits, thanks to lower energy prices and a government aid package in December that lowered bills for some consumers.
But even with these positive trends, Germany ended 2022 with an overall inflation rate of 8.7%, the highest annual rate since the country’s reunification after the end of the Cold War in 1990, compared to just 3 .2% in 2021, the Federal Bureau of Statistics said. Tuesday. Policymakers remain concerned that it could take well into next year before price pressure in Germany, Europe’s largest economy, stabilises.
For the month of December, the annual inflation rate was 9.6%, down from 11.3% the previous month, the statistics office said. Officials credited a government assistance program that subsidized energy bills for the nation’s lowest-income households in December for the year-end rate cut.
“The inflation rate is significantly lower than in previous months, partly due to the December emergency aid package,” the statistics office said.
Spain, Europe’s fourth-largest economy, also reported a slowing inflation rate, to 5.6% in December from 6.7% the previous month, according to data from the National Institute of Statistics released on Friday.
There, as in Germany, the intervention of the Spanish government to cool energy prices contributed to the decline in the rate of inflation.
The rate of inflation in both countries has been slowing since November, but economists expect it will take at least another year to reach the 2% target set by the European Central Bank. But the declines in Germany and Spain are expected to stoke debate among ECB policymakers over whether inflation has peaked and when the bank can end its interest rate hike campaign.
German Finance Minister Christian Lindner stressed that officials should focus their efforts in the new year on getting inflation back to 2%.
“This must be a top priority for the European Central Bank and the German government,” he said in remarks published Sunday in the weekly Bild am Sonntag. “Because permanently high inflation would undermine our economic foundations.”
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