Cheaper fuels slow German inflation | Business| Economy and finance news from a German perspective | DW | 11.09.2013
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Cheaper fuels slow German inflation

Lower prices for fuels slowed the German inflation rate in August, reversing two months of rising prices earlier this summer. Fears of cheap central bank money fuelling inflation have also failed to materialize.

In the month of August, Germany's inflation rate came in at 1.5 percent compared with the same month a year ago, according to data released by the Federal Statistics Office, Destatis, Wednesday.

The year-on-year figure was significantly lower than in July and June in which prices rose 1.9 percent and 1.8 percent respectively, Destatis data showed.

The German statisticians attributed the reversal of the latest trend to a fall in the costs for heating oil and car fuels which dropped 8.1 percent and 4.5 percent.

Food prices, however, remained high with butter - up 32 percent - as well as food and vegetables, which were about 7 percent higher, being the main driver of inflation in the segment.

In a month-on-month comparison, prices in Germany remained largely the same in August over July, Destatis noted. The sudden spike in food prices due to the floods in Germany in May had eased significantly, the office added.

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Eurozone interest rates at historic low

According to a recent estimate by the Ifo economic think tank, German inflation in 2013 wasn't expected to rise above 1.6 percent. Fears of fast-rising prices as a result of the European Central Bank's (ECB) expansionary monetary policy as well as economic expansion in Germany were proving unfounded so far, the research group said.

With a current inflation rate of 1.5 percent, Germany stays well within the ECB's target of 2 percent, which the central bank for the euro currency area considers as price stability.

uhe/mz (Reuters, dpa, AFP)

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