For the fifth consecutive month, Germany’s inflation rate has slowed down, according to the latest released data from the Federal Statistical Office (Destatis).

Germany’s inflation reached +3.2% in November 2023, a decline from +3.8% in October 2023. However, consumer prices in November 2023 relative to October 2023 decreased by 0.4%.

A major contributor to the 0.4% decrease in consumer prices was the seasonal reductions of package holiday prices (-11.4%). The overall cost of energy also dropped significantly by 2.1% in November 2023 from the previous month.

In terms of household energy, natural gas (-3.0%) and heating oil (-2.9%) were the two most affordable options.

Fuel and food prices

Consumers also paid less for motor fuels (-2.6%). Conversely, total food prices increased by 0.6% month on month, with vegetables seeing the largest increase ( +4.1%).

The main contributor dampening the inflation rate in November 2023 was the price of energy products, which declined by 4.5% relative to November 2022. In October 2023, energy product prices also had a dampening effect on the inflation rate, with a decline of 3.2% year over year.

The main cause of the declines since October 2023 has been the high cost of energy in 2022, a year characterised by war and crisis. Prices decreased for household energy by 2.7% and for motor fuel by 6.9% in November 2023 relative to November 2022.

Price decreases were also registered for: heating oil (-19.4%) and natural gas (-18.3%) over the same period. However, electricity prices remained higher (+ 1.6%) over the same period.

Food prices driving inflation

Food prices continued to drive inflation, with a 5.5% increase in November 2023 relative to November 2022. Notwithstanding, the year-on-year rate of increase in food prices persisted downward (October 2023: +6.1%, September 2023: +7.5%; August 2023: +9.0%).

In February 2022, there was a smaller annual increase of 5.4% in food prices. Several food groups had price increases that exceeded overall inflation: fruit (+12.0%), sugar, jam, honey and other confectionery (+11.9%), bread and cereals (+9.4%), vegetables (+7.3%), and fish, fish products and seafood (+7.1%).

However, the cost of edible fats and oils was 11.5% lower than a year ago. Price decreases were also registered for: butter (-24.8%) and sunflower oil, rapeseed oil, and the like (-17.3%). Olive oil prices increased by 43.5%. In November 2023, the inflation rate (excl. energy prices) stood at +4.0%, while the inflation rate (excl. food and energy prices) was +3.8%, indicating that inflation remains high in other product groups and exceeds overall inflation.

Core inflation

However, the year-on-year change in core inflation (i.e. CPI excl. food and energy) has slowed gradually and in November 2023, it dropped below the 4% mark for the first time since August 2022. Total goods prices rose by 3.0% between November 2022 to November 2023, with non-durable consumer goods prices experiencing a 2.9% increase while durable consumer goods saw a 3.1% increase.

Above-average price increases were registered for: Food (+5.5%), non-alcoholic beverages (+8.5%), and alcoholic beverages and tobacco (+8.6%). The rate of increase in total services prices slowed in November 2023 with the main contributors being the Germany ticket and net rents.

Prices for total services went up by 3.4% year on year (October 2023: +3.9%).