German inflation slows again as energy prices ease

Consumer prices in Europe’s top economy rose by 8.6 percent year-on-year, down from 10 percent in November, federal statistics agency Destatis said.

The decline, which was bigger than analysts had expected, brings the inflation rate in Germany back to single digits for the first time since August.

The slowdown was partly thanks to a one-off subsidy from the German government covering the December gas bill for households and businesses, Destatis said in a statement.

“Due to the December immediate assistance, among other things, the inflation rate was significantly lower than in the previous months,” it said.

For the whole of 2022, German consumer price growth reached 7.9 percent, the highest on record in post-war Germany.

As in other countries across Europe, Germany’s jump in consumer prices has been fuelled by Russia’s war in Ukraine.

Even though the December inflation rate brings some respite, prices remain “unacceptably high” especially in the food and energy sectors, said LBBW economist Jens-Oliver Niklasch.

And while hopes are growing that Germany has reached peak inflation, government subsidies “can’t be a permanent answer to price pressures”, he added.

“The fight against inflation that began last year remains a marathon, not a sprint,” he said.