German inflation eases to fresh low

German inflation eased in September to the lowest level since the start of the Ukraine war, official data showed on Wednesday.

According to Destatis, the country’s Federal Statistical Office, the annual consumer price index was 4.5%, confirming earlier estimates. It rose 0.3% on the previous month, also in line with expectations.

The harmonised index of consumer prices was 4.3%, or 0.2% on August 2023. All European Union countries use the same methodology to calculate HICP.

Ruth Brand, president of Destatis, said: "The rate of inflation has dropped to the lowest level since the start of the war in Ukraine.

"It remains high, however. Consumers are still clearly feeling the higher food prices."

Energy prices rose 1% in September, compared to an 8.3% hike in August, while food prices were 7.5% higher.

Destatis noted that while food price inflation was slowing, from 11% in July and 9% in August, price increases in many food groups remained "markedly higher"” than overall inflation.

Services inflation was 1.1 percentage points lower, at 4.0%.

Core inflation, which strips out volatile elements such as energy and food, was 4.6% compared to 5.5% in August.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: "This likely is the beginning of a sustained and accelerated decline in German core inflation. We see both the national and core rate fall by 150 basis points between now and the end of the year, extending the fall into 2024."