German Inflation Surges, Posting 1.0% Y/Y in January

10 February 2021

By David Barwick – FRANKFURT (Econostream) – Consumer prices in Germany last month rose 1.0% on the year and 0.8% on the month, the German Federal Statistical Office said Wednesday, confirming the preliminary estimates of January 28.

The annual rise was the highest since 1.4% in March of last year and is the first positive result since 0.9% last June.

According to the Statistical Office, the end of the temporary reduction in the German VAT on December 31 drove part of January’s inflation, while the introduction on January 1 of a fee for some carbon dioxide emissions also contributed.

Prices for goods were up 0.6% on the year, with food in particular 2.2% more expensive. In contrast, energy products were 2.3% cheaper. Services inflation registered 1.4% y/y.

Without energy, German inflation in February would have measured 1.4% on the year.

The Statistical Office also confirmed the preliminary estimates of German inflation on a European harmonized basis, according to which consumer prices in January rose 1.6% on the year and 1.4% on the month.