Germany Inflation September 2020

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Germany: Inflation rises to record-high level in September

October 13, 2021

Harmonized consumer prices rose 0.27% month-on-month in September, up from August’s 0.09% increase. The rise was influenced by surging prices for clothing and footwear and pricier education. Meanwhile, transport prices rose at a softer pace despite a rise in fuel costs.

Harmonized inflation rose from 3.4% in August to a record-high of 4.1% in September. The reading partly reflected a less favorable base effect as the value added tax was temporarily reduced in the second half of last year amid the government’s Covid-19 fiscal response. Additionally, inflation has been pushed up by material shortages. Furthermore, energy prices have risen notably compared to a year ago due to the introduction of a CO2 tax in January, while the increase to minimum wage also fueled inflation. Meanwhile, the trend pointed up, with annual average harmonized inflation coming in at an over two-year high of 1.7% in September (August: 1.3%).

Analysts at the EIU commented on the inflation outlook and its implications for the European Central Bank’s loose monetary policy stance, adding:

“Inflation has spiked in 2021 […] and will remain elevated in the remainder of the year, owing to one-off factors, before moderating in 2022-25. […] Annual price growth will average 2.5% in 2021 given these changes in administered prices, and register about 3% in the second half of the year […]. The Economist Intelligence Unit expects inflation to moderate to an average of 1.6% in 2022-25, dampening opposition to the accommodative monetary policy of the European Central Bank (ECB).”

FocusEconomics panelist expect harmonized inflation to average 2.7% in 2021 and 1.7% in 2022.


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Germany Inflation September 2021 0

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


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