The inflation rate in Germany was 7.2 percent in April. This was announced by the Federal Statistical Office in Wiesbaden on Friday after an initial estimate. In March, the rate was 7.4 percent, after 8.7 percent in January and February.

Christian Siedenbiedel

Editor in business.

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This means that inflation in Germany remains quite high and far from the European Central Bank's (ECB) target of 2 percent. Inflation is also proving to be quite persistent in other euro area countries. In Spain, for example, the rate rose again in April, from 3.1 to 3.8 percent. The European statistical office Eurostat plans to publish the rate for the euro area as a whole on Tuesday. This could also determine how much the ECB raises interest rates next Thursday. Most economists expect an interest rate hike of 0.25 percentage points after the latest statements from the ECB Governing Council. However, a stronger jump of 0.5 percentage points is not yet completely ruled out.

Overall, inflation rates this year are not quite as high as they were last autumn because the sharp rise in energy prices at the beginning of the Ukraine war is not repeated. Since March, therefore, a so-called statistical base effect has been noticeable: Because energy prices rose so sharply in March last year, this year's values have been compared with those from last year for the inflation calculation since March – this automatically makes the inflation rate somewhat lower.

Oil states temporarily drive up oil prices

However, before Easter, the oil states of the OPEC plus alliance had announced a cut in their oil production, thus driving up the prices for oil and gasoline again. That didn't last very long, because recession worries in America were now putting pressure on oil prices. However, at least in April, it has led to slightly higher energy prices in Germany as well.

You can find out more about the price development for individual products from the figures for North Rhine-Westphalia, which have already been published in more detail, and are usually relatively representative of Germany. The slight decline in the inflation rate there is partly due to the fact that there are signs of a turnaround in food, says Holger Schmieding, chief economist at Hamburg-based bank Berenberg. The annual increase in food prices in NRW was 23.4 percent in March. In April, it fell to a still very high 17.6 percent.

"In April, vegetable prices fell by 7.6 percent compared to the previous month," Schmieding points out. This means that the inflation rate for vegetables has fallen from an exorbitant 30.3 percent year-on-year to a still very high 16.9 percent. This could also be due to the indirect consequences of the always high, very high energy prices. "In April, a larger proportion of the vegetables will probably no longer come from greenhouses, which will have to be heated at significantly higher costs than in previous years." In addition, as with energy, there is a base effect: the sharp rise in prices for edible fats and oils shortly after the start of the war in the previous year fell out of the annual rate.

For cucumbers, the price fell by 40.7 percent compared to March, for lettuce and iceberg lettuce by 25.2 percent, and for tomatoes by 15.7 percent.

Bread and meat more expensive, edible oils cheaper

Bread and other cereal products rose by 0.7 percent compared to the previous month and by 21.5 percent compared to the same month last year. Cookies were 4.4 percent more expensive than a year ago, pizza and quiche 3.6 percent. Meat and meat products were 0.2 percent more expensive compared to March, and 9 percent for the year as a whole. Dairy products and eggs were 0.5 percent more expensive compared to the previous month, and 31.3 percent compared to the same month last year. Curd was 65.6 percent more expensive than a year ago, cream 45.6 percent.

Edible fats and oils were 2.3 percent cheaper compared to the previous month, and 5.3 percent more expensive compared to the same month last year. Fruit was 0.1 percent cheaper compared to March, but 8.5 percent more expensive for the year as a whole. Alcoholic beverages rose in price by 0.7 percent in April compared to March and by 2022.14 percent compared to April 7.

The somewhat lower price pressure for many foodstuffs is offset by a renewed increase in energy inflation over the year to plus 4.7 percent in April from minus 0.3 percent in March, economist Schmieding emphasized. Although fuels were 10 percent cheaper than a year ago, household energy prices rose by an average of 17.1 percent. In the case of gas, the price increase for consumers over the year was as high as 43.8 percent.

Special effects for travel during the Easter holidays

The so-called core rate of inflation, i.e. inflation without strongly fluctuating prices such as energy and food, which plays an important role in monetary policy, has also fallen slightly in NRW, from 5.6 to 5.5 percent.

"However, this is probably not yet a trend reversal," says economist Schmieding. From his point of view, the slight decline is mainly due to a seasonal reason.

Since this year's Easter was a week earlier than last year, this time a slightly larger part of the expensive Easter travel season fell in March instead of April. Accordingly, the price increase for package holidays has eased from 12.8 percent in March to a still very high 10.4 percent, and for restaurant services from 11.9 to 10.4 percent.

"The citizens' desire to travel is unbroken," commented Schmieding: "They also like to go to restaurants again – the pandemic is over."