As expected, German consumer prices rose by 1.6% in January (December 1.7%, November 1.8%). In January, food prices increased massively as in the previous months, this tim by 3.1% year-on-year. Important: The Harmonised Index of Consumer Prices (HICP), which is more important for ECB purposes, is not 1.6% but only 1.4%. So it´s still a long way to the ECB’s inflation target of 2.0% or close to 2.0%. This HICP graph shows the slowdown in price increases in recent months. A dream comes true for all ECB Governors who would like to postpone an interest rate hike forever.
Here are more details from the Federal Statistical Office, and in the following charts you see more detailed prices.
Energy prices, which in January 2018 were by 0.9% higher than a year earlier, had a downward effect on the overall inflation rate. Also, the increase in energy prices slowed again (December 2017: +1.3%; November 2017: +3.7%). From January 2017 to January 2018, prices rose especially for heating oil (+5.5%). Price increases were also recorded for electricity (+1.6) and charges for central and district heating (+1.5%). In contrast, the prices of gas (–1.3%) and motor fuels (–0.5%) were down on the same month a year earlier. Excluding energy prices, the inflation rate would have been slightly higher (+1.7%) in January 2018.
Food prices rose considerably by +3.1% in January 2018 compared with January 2017. The year-on-year increase in food prices has been three percent or over for six months now (August 2017: +3.0%) and had an upward effect on the overall inflation rate also in January 2018. A year-on-year increase in prices was recorded especially for edible fats and oils (+15.2%) and for dairy products (+10.3%) in January 2018. Consumers had to pay markedly more (+8.3%) for fruit, too. However, the prices of vegetables declined considerably year on year (–5.7%). Excluding energy and food prices, the inflation rate would have been slightly lower (+1.5%) in January 2018.
Prices of goods (total) were up 1.5% in January 2018 on January 2017. As regards goods, prices were up not only for energy products and food; marked price increases were also observed for newspapers and periodicals (+5.1%) and tobacco products (+4.5%). However, there were also some goods that showed price decreases as, for example, information processing equipment (−2.0%), consumer electronics (−1.4%) and clothing (−0.9%).
The prices of services (total) rose 1.6% in January 2018 compared with January 2017. A major factor contributing to the increase in service prices was the development of net rents exclusive of heating expenses (+1.7% on January 2017), as households spend a large part of their consumption expenditure on this item. Larger price increases were recorded, for example, for maintenance and repair of vehicles (+4.0%), in-patient health services (+2.5%) and catering services (+2.1%). In contrast, prices were down on a year earlier, for instance, for telecommunication services (–0.8%).