An inflation of 4 to 6% is projected for 2023 by the Ifo Institute for Economic Research in Munich and estimates that “the peak of inflation has been passed“. In 2022, inflation in Germany was 7.9%, while estimates for this year were for prices close to 9%.

“Trend reversal hereTimo Volmershäuser, head of budget at Ifo, emphasizes the Süddeutsche Zeitung and notes that the “braking” of electricity and natural gas prices alone is enough to reduce inflation by two points. In addition, he explains, inflation is also limited by the fact that energy is getting cheaper again in some cases. Significantly, the price of oil is even lower than before Russia’s attack on Ukraine.

“In 2022, inflation was also fueled by the financial market environment, war and fear, which led to inflated energy prices in spot markets.”Guder Schnabl, head of the Institute for Macroeconomics and Business Cycle Research at the University of Leipzig, told the newspaper.

Stefan Koots, vice-president of the Kiel Institute for the World Economy, even predicts that in the long run, energy prices will not cause inflation to rise. However, Mr. Schnabl warns of the risk of rising inflation due to high government spending in the euro area.

Source: RES-IPE