Inflation in Germany falls again in March

Inflation in Germany fell in March, German statistics agency Destatis reported on Monday.

Consumer prices fell to 2.2% year on year, compared to 2.5% in February.

This is the lowest inflation value since April 2021, when it was 2%.

The annual inflation rate in January this year was 2.9%.

The weakening of inflation was driven by a decrease in energy prices.

Energy became 2.7% cheaper in March, despite the end of the energy price cap at the beginning of the year and the increase in the carbon price to 45 euros (48.36) per ton of CO2.

Could the ECB reduce interest rates?

Carsten Brzeski, a researcher at ING Bank, said that “inflation in Germany could fall to two percent as early as next month”, adding that the rate could increase slightly again in the coming months.

He said the continued slowdown in inflation could be a sign that the European Central Bank’s (ECB) interest rate increases were having an effect.

The ECB raised interest rates from mid-2022 in response to rising inflation.

In March, ECB President Christine Lagarde warned against the risk of acting “too late” to start lowering interest rates again.

sdi/lo (AFP, dpa)

While you’re here: Every Tuesday, DW editors summarize what’s happening in German politics and society. You can sign up here to receive the weekly Berlin Briefing email newsletter.