Inflation in Germany took a big dip in August, falling to 1.9% compared with the same month last year. It is the lowest rate in more than three years and beats many economists’ expectations.

Consumers in Germany had some of the pressure on their wallets relieved in August, with inflation sinking to just 1.9% compared with the same month last year, preliminary figures from the Federal Statistical Office showed on Thursday.

That compares with a year-on-year inflation rate of 2.3% in July.

Prices even sank slightly overall in comparison with the previous month, by 0.1%

The August figure, the lowest level in more than three years, brings inflation in the country below the European Central Bank’s (ECB) overall 2% inflation target for the eurozone.

The statistic could boost the case for another interest rate cut by the ECB next month.

“People have more money in their wallets again. Inflation is falling, real wages are rising for the fifth quarter in a row,” Chancellor Olaf Scholz said on X, formerly Twitter.

What did the statistics agency say?
The main driver of the reduction was the significant lowering of energy prices, the Statistical Office said.

Food prices were 1.5% higher than in August last year — a bigger increase than in the previous month, when they rose 1.3% year-on-year, but still a below-average rise.

The increase in prices for services, however, rose strongly, with a rise of 3.9% in a year-on-year comparison.

Eurozone inflation went past 10% in October 2022 after energy prices rose in the wake of Russia’s invasion of Ukraine.

Credit: DW news