German Inflation Climbs to February High in September
Berlin – German inflation unexpectedly rose in September, reaching its highest level as February, according to data released Friday by the Federal statistical Office (Destatis). The consumer price index (CPI) increased by 4.5% year-on-year, reversing a downward trend and fueling concerns about the persistence of inflationary pressures within Europe’s largest economy.
The uptick in inflation,driven largely by rising energy prices,poses a challenge to the European Central Bank’s efforts to stabilize prices and could delay anticipated interest rate cuts. German consumers are already feeling the strain of higher living costs, and the renewed inflationary pressure threatens to dampen economic growth as household spending slows. The latest figures will likely intensify debate among policymakers about the appropriate monetary policy response and its potential impact on a fragile economic recovery.
Destatis reported that energy prices were 8.0% higher in September compared to the same month last year, while food prices increased by 6.4%. Excluding energy and food, so-called core inflation rose to 3.9%. A key factor contributing to the increase was the end of government relief measures implemented to offset the energy crisis triggered by the war in Ukraine.
“The increase in inflation is primarily due to the base effect from last year, when energy prices were temporarily lowered by government measures,” explained a Destatis spokesperson. ”As these measures have now expired, prices are returning to a more normal level.”
The German economy has been grappling with weak growth and a challenging global environment. While inflation has been moderating overall in recent months, the September increase underscores the vulnerability of the economy to external shocks and supply-side pressures. Economists are now revising their forecasts, with some predicting that the ECB will maintain its current interest rate levels for longer than previously expected.