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The inflation rate in Germany falls to 6.1%

The inflation rate in Germany falls to 6.1%

August 30, 2023

 

Inflation rate still high

The continued high inflation rate is primarily due to rising food prices. What is unclear is how energy prices currently influence the inflation rate. Natural gas, for example, is significantly more expensive in Germany than it was a year ago, even though prices on the world markets are stable again. On the other hand, heating oil is cheaper than it was a year ago. If we leave out the highly fluctuating prices for food and energy sources, then we get core inflation. This fraud in August was 5.5%, the same as in the previous month.

 

Inflation rate in Germany remains well above target

In general, the inflation rate is declining in Germany as well as in other European countries and especially the USA. Last fall the inflation rate in Germany was over 8%. The current inflation rate remains well above the 2% target. The European Central Bank has announced that it will raise the key interest rate at the next interest rate meeting on September 14th if inflation continues to be too high.

 

Interest rate reduction excluded

According to the head of the European Central Bank, either an interest rate increase or a pause on interest rates is possible. A reduction in interest rates can be considered impossible. Inflation figures for the entire euro area will be published on Thursday. At this point in time, Spain, for example, has already revealed the current inflation figures for the month of August. This increased from 2.1% to 2.4% in the same period.

 

Inflation rate depresses euro exchange rate

A higher inflation rate in the euro area than in Switzerland is depressing the euro's exchange rate against the Swiss franc. This is a natural compensation mechanism that is linked to the lower fall in the value of the Swiss currency. The current Euro Swiss Franc exchange rate is 0.957908

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