BERLIN, Oct. 11 (Xinhua) -- Germany's inflation rate eased to 1.6 percent in September, a decrease of 0.3 percentage points from the previous month. These figures, released by the Federal Statistical Office (Destatis) on Friday, mark the lowest level in over three years.
A significant drop in energy prices in September contributed to the slowdown in inflation, said Ruth Brand, head of the statistics authority. Energy product prices fell by 7.6 percent year-on-year, following declines of 5.1 percent and 1.7 percent in the previous two months. Food prices also only rose by 1.6 percent.
However, Brand underlined that above-average price increases in the services sector have simultaneously been driving inflation up. Consumer prices in this sector rose by 3.8 percent in September, with the largest increases seen in areas such as insurance, social facilities and catering.
Carsten Brzeski from ING Research noted that the September inflation rate likely indicates the end of the disinflationary trend driven by last year's high energy price base. He predicted that inflation in Europe's largest economy will remain relatively stable in the coming months, with a slight uptick towards the end of the year.
Destatis' data also revealed that core inflation, which excludes food and energy, stood at 2.7 percent in September. This index has consistently exceeded overall inflation since the beginning of this year, signaling persistent price increases, which also remain above average in other significant product categories.
Despite the slowdown in inflation in September, Brzeski cautioned that there are still reasons to be vigilant. Consumers have yet to recover their losses in real purchasing power from recent years, he said, and "persistent supply-side constraints could easily bring back inflation as soon as demand picks up again."
The German government attributes the primary driver of next year's economic growth to private consumption, which is expected to expand due to rising household purchasing power, partly as a result of declining inflation rates. The Economics Ministry stated in its latest forecast on Wednesday that annual inflation rates are likely to be 2.2 percent in 2024, and 2 percent in 2025.
However, the ministry has lowered its economic growth forecast for this year to a contraction of 0.2 percent. ■
