Inflation in Germany slows down as government measures take hold

After gathering pace consistently for months, the inflation rate in Germany slowed slightly - and unexpectedly - in June, according to preliminary figures from the Federal Statistical Office (Destatis), as various government interventions took hold. 

Price of food and energy rises, public transport and fuel slightly cheaper

The continuous rise in the cost of goods and services in Germany slowed somewhat in June, following the introduction of the tax cut on fuel and the 9-euro ticket. According to initial estimates from Destatis, consumer prices in June were 7,6 percent higher than in the same month last year, down from a 50-year high of 7,9 percent in May. 

Once again, the primary drivers of the price increases in June were energy, the cost of which rose by 38 percent, and food, which was on average 12,7 percent more expensive than in the previous year. 

However, there were indications that recent government interventions to relieve consumers are having the desired effect: compared to May 2022, tickets for public transport and, in some cases, fuel were cheaper in June 2022, which helped to throttle the overall inflation rate. However, Destatis said it is not yet clear the extent to which the 9-euro ticket and the discount on fuel taxation have impacted inflation, with a full report not expected until mid-July. 

Germany should continue to expect high inflation, experts say

Consumer prices in Germany have been rising almost without pause for the last 18 months, with the last decrease registered in January 2022. Inflation was initially driven by worldwide supply chain disruption as a result of the coronavirus pandemic, with demand outpacing supply, and then further stoked by the Russian invasion of Ukraine, which caused volatility in the energy market particularly. 

May's inflation rate is the highest ever seen in reunified Germany, and the highest since the winter of 1973 / 1974 in the western federal states. 

Economists have said they do not expect the slight slowdown to be a turning point in the inflation rate, and have warned people and companies to continue to expect surging inflation rates, especially after the government's interventions come to an end at the beginning of September.