German Inflation Stays Above 5%

(RTTNews) - Germany's inflation accelerated further in December to remain above 5.0 percent, preliminary figures from Destatis showed Thursday. The flash consumer price index rose 5.3 percent year-on-year following a 5.2 percent increase in November. Economists had expected inflation to slow to 5.1 percent. Headline inflation accelerated for a seventh month in a row. A higher inflation figure was last measure in June 1992, at 5.8 percent. The record high CPI inflation for Germany is 6.2 percent logged in 1992.

"While the December number should mark the peak of the inflation surge, inflationary pressure will first broaden before it finally abates towards the end of the year," ING economist Carsten Brsezki said.

Energy inflation eased to 18.3 percent from 22.1 percent in November, after accelerating for five months. Food inflation accelerated to 6.0 percent from 4.5 percent. Services costs rose 3.1 percent following a 2.9 percent gain in the previous month. Compared to the previous month, the CPI rose 0.5 percent after a 0.2 percent drop in November. Economists had forecast a 0.4 percent increase. The harmonized index of consumer price, or HICP, rose 5.7 percent year-on-year following a 6.0 percent increase in the previous month. That was in line with economists' expectations.

The EU measure of inflation rose 0.3 percent from the previous month, same as in November. Economists were looking for a 0.2 percent gain. Destatis said there were a number of reasons for the high inflation rates since July, which include base effects due to low prices in 2020.

In this context, especially the temporary value added tax reduction and the sharp decline in mineral oil product prices had an upward effect on the overall inflation rate, the agency added.

The annual average inflation for 2021 was 3.1 percent, which is the highest since 1993.