Inflation in March falls to 7.4 percent

Inflation in Germany remains at a high level despite a slowdown in March. Consumer prices rose by 7.4 percent compared to March 2022, as the Federal Statistical Office announced on Thursday based on initial calculations. In February, an annual inflation rate of 8.7 percent was recorded. For the first time since last August, the inflation rate in March was below the eight percent mark. At that time, 7 percent had been measured.

However, the development does not mean any relief for consumers. The prices are compared with the level of the same month of the previous year. In March last year, consumer prices rose by 5.9 percent. Measured against this, the current increase is even higher.

The increase in energy prices, which had skyrocketed in March 2022 after the start of the Russian war of aggression in Ukraine, slowed down significantly at plus 3.5 percent (February 2023: plus 19.1). The government price brakes for gas and electricity, which will apply retrospectively from March 1, 2023, should also have a dampening effect. Food prices, on the other hand, rose at an above-average rate of 22.3 percent.

For a long time, inflation was mainly driven by high energy and food prices. In the meantime, price increases are affecting more and more parts of everyday life. Higher inflation rates reduce the purchasing power of consumers because they can then afford less for one euro. Compared to the previous month, consumer prices rose by 0.8 percent in March.

According to economists, inflation in Europe's largest economy may have peaked. However, they do not expect a thorough easing of prices in the current year. The federal government assumes an annual average inflation rate of 6.0 percent. According to revised data from the Federal Office, consumer prices in Germany rose by an average of 6.9 percent last year.