It did not proceed without difficulties: The Federal Statistical Office has revised the consumer price index for Germany and converted it to a new base year. There were software problems, which had initially led to a delayed publication of the January inflation rate.

Christian Siedenbiedel

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Now, however, the subsequently corrected rates could be published: On Wednesday morning, the Federal Statistical Office first presented the changed inflation rates from the past. Further details on the changeover should be published in a press conference in the morning.

The index has been rebased. This is a process that is done regularly. The starting year is no longer the year 2015, as before, but the year 2020. As a result, inflation rates had to be adjusted somewhat since 2020. The changeover has consequences for the weighing schemes; i.e. the question of which goods and services with their prices are taken into account to what extent in the price index.

The adjusted rates

Accordingly, the inflation rate in Germany in January was 8.7 percent. Those for December 2022 have been corrected, from 8.6 to 8.1 percent. In addition, there is a new rate for 2022: 6.9 instead of 7.9 percent. For 2021, the rate remained at 3.5 percent.

Despite the relief measures, prices for energy products in January 2023 were 23.1 percent above the level of the same month last year, the Federal Statistical Office continues. In December 2022, the inflation of energy products had been 20.3 percent. The reason for the price increase in January 2023 is likely to be the discontinuation of the "December emergency aid". On the other hand, the increase in energy is partly limited by the price brakes for electricity, natural gas and district heating. However, energy prices are influenced by many factors, including international purchase prices.

"On the basis of the new basket of goods, German inflation has not shown a downward trend since the autumn," commented Jörg Krämer, Chief Economist of Commerzbank. In the old version of the monthly inflation rates for 2022, there had been a peak of 10.4 percent in October, and then a noticeable relief to 8.7 percent in January this year. According to the new calculation with the new shopping basket, the rate had been 8.8 percent in October - and then not much changed.

In addition, core inflation, i.e. inflation without strongly fluctuating prices such as those for energy and food, has recently "risen massively," emphasized economist Krämer - from 5.2 to 5.6 percent. It is therefore far too early for an "all-clear on the inflation front".

"According to the latest figures, the inflation rate never rose above the 10 percent mark last year," commented Sebastian Dullien of the Institute for Macroeconomics and Business Cycle Research, which is close to the trade unions. "Overall, however, the European Central Bank is likely to be rather concerned about the current figures, especially because of the high core rate."

A delay with consequences

The delayed publication of the German inflation rate for January had all sorts of effects. For example, the European statistical office Eurostat in Luxembourg, which actually needs values from all individual countries of the monetary union to calculate the inflation rate of the euro area, first had to work with a Luxembourg estimate for Germany.

On this basis, the January inflation rate for the euro area was 8.5 percent, after 9.2 percent in December. This figure was used by the Governing Council, the eurozone's supreme monetary policy body, at its February interest rate meeting; when it decided to raise key interest rates by 0.5 percentage points and hold out the prospect of a further 0.5 percentage point rate hike in March.

Euro inflation likely to be revised upwards

Eurostat had not immediately changed its inflation value for the euro area when Germany finally published its value. This Thursday, the final inflation rate for the euro area is to be published with the correct value from Germany. It is speculated that the rate will have to be revised slightly upwards because the German rate has turned out to be higher than originally estimated by Eurostat, possibly to 8.6 or 8.7 percent. It is true that many of last year's inflation rates in Germany have now been revised downwards; but Eurostat's estimate of Germany's January inflation rate was arguably lower than the actual figure.