High energy prices drove inflation to its highest level since late 2023 in September. The inflation rate stood at 3.3 percent compared to the same month last year, the Federal Statistical Office announced on Tuesday, confirming its initial estimate. “The inflation rate reached a new annual high of over three percent in September. This was also the highest figure since December 2023,” explained Ruth Brand, President of the Office.
According to the Federal Statistical Office, the inflation rate had been 2.9 percent in August and 2.8 percent in July. Brand explained that the reason for the increase in September was “once again the trend in energy prices.” “The rise in prices was particularly evident in petroleum products at gas stations and in heating oil.”
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According to data from statisticians, energy prices rose by 14.9 percent in September. This marked the third consecutive month of accelerating energy price inflation: prices had previously climbed by 3.4 percent in June, 8.3 percent in July, and 10.5 percent in August. The Federal Statistical Office further noted that September saw the sharpest rise in energy prices since February 2023.
Fuel prices for consumers rose sharply by 37.1 percent in September. The price of light heating oil climbed even more steeply, increasing by 74.9 percent. Firewood, wood pellets, and other solid fuels became 15.6 percent more expensive.
The situation was different for electricity, which became 5.5 percent cheaper compared to the same month last year. Natural gas (excluding service charges; down 2.8 percent) and district heating (down 1.0 percent) also saw price drops. The Federal Statistical Office explained that this was “partly due to measures implemented by the Federal Government since the beginning of the year.”
The Federal Government had abolished the gas storage levy, for one thing. For another, it decided to subsidize grid fees in order to ease the cost burden on electricity customers and thereby lower overall electricity costs.
According to the data, the rise in prices for services slowed slightly again, standing at 2.7 percent. Food prices rose much more modestly, by 0.4 percent. However, the prices of specific products—such as eggs, fresh vegetables, and fish and seafood—increased significantly. Conversely, consumers paid less for butter, fresh fruit, and dairy products.
Excluding energy, the inflation rate stood at 2.1 percent, the Federal Statistical Office further reported. So-called core inflation—the inflation rate excluding food and energy—remained unchanged at 2.4 percent.
“As in every month since the start of the Iran war, the rise in inflation in September is attributable almost exclusively to higher fuel and heating oil prices,” explained Silke Tober, an inflation expert at the Institute for Macroeconomics and Business Cycle Research (IMK), part of the trade union-affiliated Hans Böckler Foundation. Overall, however, there are “no signs of a rise in medium-term inflation, either in Germany or in the Eurozone as a whole”—meaning there is no sufficient reason for the European Central Bank (ECB) to raise key interest rates further.
Instead of “further weakening the economy through higher financing costs,” she advocated for fiscal measures “that mitigate inflation.” While the fuel tax rebate makes sense, “it should be combined with measures to curb consumption, such as stricter speed limits,” Tober explained.
“The planned reduction in the electricity tax also provides relief; however, regarding future inflation trends, it merely acts as a counterweight to the tobacco tax hike scheduled for January 2027 and the co-payments required from those with statutory health insurance,” she continued.
The CDU intends to push for lowering the electricity tax to the European minimum “for everyone.” On Monday, CDU leader Friedrich Merz stated that “fiscal headroom in the budget” should be used for this purpose. Such scope could become available “if growth solidifies and stabilizes.”
Author: AFP – oer/mt
Sources: AFP Press Portal