Germany sees inflation ease

German inflation continued to ease in December, official data showed on Tuesday, as energy prices softened.

According to Destatis, the Federal Statistical Office, the annual consumer price index fell to a four-month low of 8.6% in December, compared to 10.0% in November, in line with consensus.

The harmonised index of consumer prices also eased, to 9.6% from 11.3% a month earlier, also in line with forecasts. All European Union countries use the same methodology to calculate HICP.

An 11.6% month-to-month decline in energy prices helped bring down inflation in December, with household energy prices down 12.9%.

For 2022 as a whole, inflation averaged 7.9%, Destatis said, or 8.7% on a HICP basis. The price of energy products surged 34.7% last year, compared to a 10.4% increase in 2021, while food prices jumped 13.4% year-on-year. They rose just 3.2% in 2021.

Ruth Brand, Federal Statistical Office president, said: “The historically high year-on-year inflation rate was mainly driven by the extreme price rises for energy products and food since the war started in Ukraine.

“Crisis and war-related effects, such as delivery bottlenecks and significant price increases at upstream stages in the economic process, were characteristic of the entire year.”

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “Headline inflation in the Eurozone’s largest economy eased significantly at the end of 2022. That’s great news, but the decline was propelled mainly by fiscal stimulus, due to one-off energy support ahead of the price cap running through 2023.

“We doubt this decline [in energy prices] will be sustained. German utility prices usually adjust at the start of the year, pointing to a rebound in the January CPI report, as prices rise in response to very high energy prices through 2022.”