Germany: Inflation slows down, but how good is that?

Consumer price inflation in Germany fell to 10.0% year-on-year in November 2022, down from October's all-time high of 10.4% and below the market consensus of 10.4%. according to a preliminary estimate. However, the rate remained well above the European Central Bank's target of around 2%, suggesting the need for continued monetary tightening to combat high inflation. Goods inflation slowed to 17.2% from 17.8% in October, thanks to a more contained increase in the cost of energy (38.4% against 43.0%). On the other hand, food prices probably increased further (21.0% vs. 20.3%). Services inflation also slowed to 3.7% from 4.0%, although the rental price rate accelerated to 1.9% from 1.8%. On a month-to-month basis, consumer prices fell 0.5% in November, the first decline in a year.

A few days ago we indicated that producer prices in Germany were down, as shown in the graphs below

This could only have repercussions on the inflation trend which is slowing down for two reasons:

1. the wave of increases in energy prices is running out. Prices are high, but not with growth as in recent months;
2. economic growth slows down, and therefore also the inflationary push, despite a certain spiral in wage prices much stronger in Germany than in Italy

So inflation slows down, but if the ECB accelerates its tightening and if the economy doesn't turn out to be strong enough we risk seeing a drop in inflation closely linked to the recession, and it will be pain.

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The article Germany: Inflation slows down, but how good is it? comes from Economic Scenarios .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/germania-rallenta-linflazione-ma-quanto-e-un-bene/ on Tue, 29 Nov 2022 16:53:49 +0000.