Annual inflation in Germany easing but remained high in 2023

Inflation in Germany in 2023 remained high at 5.9% for the full year, according to figures released on Tuesday.

The inflation rate dropped by one percentage point from a record high in 2022, although it remained at the second-highest level since Germany reunification in 1990, according to figures from Germany's Federal Statistical Office.

Inflation is "still at a high level," Ruth Brand, the agency's president, said on Tuesday.

Monthly data showed inflation dropping for much of the second half of 2023. But inflation rose again in December, following five months of decline, although at least some of the jump could be attributed to comparison factors.

However, economists expect consumer prices to ease increasingly, and inflation to fall, in the course of 2024.

Inflation rose sharply in Germany following Russia's full-scale invasion of Ukraine in February 2022, which drove up prices for food and energy significantly. Energy prices hit Germany, which had relied heavily on imported Russia gas, particularly hard.

Those trends continued last year, albeit not quite as strongly.

"Food became particularly expensive on average in 2023," said Brand.

Consumers had to pay 12.4% more for food. Prices for energy products rose by 5.3% in 2023 compared to the previous year.

The annual inflation rate excluding energy and food - which is sometimes called the core inflation rate - was 5.1% in 2023 after 3.8% in 2022.

The increase illustrates "that inflation in other goods sectors was also high on average in 2023," the Statistical Office said in the report.

In December, consumer prices rose by 3.7% compared to the same month last year, according to new figures released on Tuesday, which confirmed earlier preliminary estimates.

Inflation in November had been at the lowest level since June 2021 at 3.2%.