Germany’s Inflation Rate Hit a High in 2022
The pace of price rises in Germany slowed in December, dropping back into single digits, thanks to lower energy prices and a government relief package in December that eased some consumers’ utility bills.
But even with those positive trends, Germany ended 2022 with an overall inflation rate of 8.7 percent, the highest annual rate since the country’s reunification following the end of the Cold War in 1990, up from just 3.2 percent in 2021, the federal statistics office said Tuesday. Policymakers remain concerned it could take well into next year before price pressure in Germany, Europe’s largest economy, stabilize.
For the month of December, the annual rate of inflation was 9.6 percent, from a rate of 11.3 percent the month before, the statistics office said. Officials credited a government aid package that subsidized energy bills among the country’s lowest-income households in December for the year-end rate drop.
“The inflation rate is significantly lower than in previous months, partly due to the December emergency aid,” the statistics office said.
Spain, Europe’s fourth-largest economy, also reported a slowing rate of inflation, at 5.6 percent in December, from 6.7 percent the month before, according to data from the National Statistics Institute released on Friday.
There, as in Germany, intervention by the Spanish government to cool energy prices contributed to the drop in the pace of inflation.
The rate of inflation in both countries has been slowing since November, but economists expect it will take another year, at least, to reach the European Central Bank’s target of 2 percent. But the drops in Germany and Spain are expected to fan debate among E.C.B. policymakers over whether inflation has peaked, and when the bank can end its campaign of rising interest rates.
Germany’s finance minister, Christian Lindner, stressed that officials needed to focus their efforts in the new year on returning inflation to 2 percent.
“This must be a top priority for the European Central Bank and the German government,” he said in remarks published on Sunday in the Bild am Sonntag weekly. “Because permanently high inflation would undermine our economic foundation.”