Brandenburg Gate in Berlin, Germany

Germany Inflation January 2020

Germany: Harmonized inflation stable in February

Harmonized consumer prices rose 0.6% month-on-month in February, down from January’s 1.4% jump, on softer price increases across the board, with only clothing and footwear prices increasing at a stronger rate.

Harmonized inflation was stable at January’s 1.6% in February. Inflation returned at the start of the year as the temporary reduction in value added tax, as part of the government’s fiscal response to the health crisis, was removed. Lastly, the trend was also stable as annual average inflation came in at 0.4% for the third month in a row in February.

Oliver Rakau, chief German economist at Oxford Economics, noted that inflation has also been driven by “further gains in energy prices and despite slowing food inflation, with core inflation measures turning out a tad higher than expected.”

Rakau continued:

“Along with our upwardly-revised oil price forecast, this lifts our 2021 inflation forecast to 2.0% from 1.8%. But we now also see a sharper slowdown to 1.4% in 2022 as we still think that underlying price pressures will remain muted amid sluggish wage growth and subdued capacity utilization.”

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