German inflation rate hits lowest since August 2021 amid falling energy prices

The German inflation rate in October has dropped to its lowest level since August 2021, according to data from Destatis. This decline was primarily due to a decrease in energy and fuel prices, which fell by 3.2% and 7.7% respectively year-on-year. Consumer prices rose by 3.8% compared to last year, marking a decrease from September’s 4.5%.

Despite this overall reduction, Ruth Brand, president of Destatis, pointed out that inflation remains high compared to medium and long-term figures. This is particularly evident in food prices, which saw a year-on-year increase of 7.5% in October. Within this category, sugar, jam, and honey prices experienced a significant surge of 13.4%.

Excluding volatile food and energy prices, the core inflation rate fell to 4.3% from September’s 4.6%. This shift supports the argument that the European Central Bank (ECB) may have reached the peak of its rate-hiking cycle, leading to speculation about when it will reduce its deposit rate from the current 4.0%.

These recent trends and figures align with preliminary estimates and a consensus among economists polled by The Wall Street Journal. The falling inflation rate suggests that the ECB could be nearing the end of its cycle of raising rates, a development that will be closely monitored by investors and policymakers alike.

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