Germany Inflation December 2020


Germany: Consumer prices rise in December

January 20, 2021

Harmonized consumer prices rose 0.57% over the previous month in December, swinging from the 1.04% fall logged in November. December's reading marked the first uptick in prices since June and was driven by a notable rise in transport prices amid a jump in fuels costs. In addition, prices for transport, and recreation and culture also rose. That said, lower prices for food and non-alcoholic beverages, and clothing and footwear limited upward pressure on prices.

Harmonized prices came fell 0.7% year-on-year in December, matching November’s print, and continued to reflect the impact of the temporary reduction in value added tax as part of the federal government’s fiscal response to the pandemic. Meanwhile, the trend pointed down mildly, with annual average inflation coming in at 0.4% in December (November: 0.6%).

Looking at the year as a whole, harmonized inflation eased to 0.4% in 2020 from 1.4% in 2019 due to the Coid-19 pandemic. This year, inflationary forces should strengthen on the back of the end of the value added tax reduction, easing of restrictive measures, and higher energy prices amid rising oil prices.

FocusEconomics panelists see harmonized inflation averaging 1.4% in 2021, which is unchanged from the previous month’s forecast. For 2022, our panelists expect harmonized inflation averaging 1.4%.


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Germany Inflation Chart

Germany Inflation December 20 20 0

Note: Annual and monthly variation of consumer price index in %.
Source: Federal Statistics Office (Destatis) and FocusEconomics calculations.

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