Germany Reports Deflation For The First Time in 5 Years

German annual inflation rate dropped 0.4 percent in January of 2015, following a 0.2 percent increase in the previous month. It is the first time since September 2009 the inflation rate turns negative, mainly due to a fall in energy prices.

Year-on-year, energy prices declined by 9.0 percent. Prices were down for heating oil (-30.8 percent), motor fuels (-15.4 percent). Prices of other energy products also fell, namely charges for central and district heating (-2.1 percent) and gas (-1.5 percent). Electricity prices, however, continued to rise slightly by 0.2 percent.

Prices of food and non-alcoholic beverages fell by 1.0 percent from January of 2014 (including food -1.3 percent). Prices decreased for edible fats and oil (-9.7 percent; including butter -18.7 percent), vegetables (-5.9 percent) and fruit (-3.2 percent). Consumer also paid less for dairy products and eggs (-2.1percent). In contrast, prices increased for coffee, tea and cocoa (+9.9 percent).

Cost of goods as a whole fell  by 2.0 percent while cost of services increased by 1.2 percent. Among goods, lower prices were recorded especially for  consumer electronics (-7.9 percent) and telephones (-6.4 percent). Consumers had to pay higher prices than a year earlier, for newspapers and periodicals (+5.4 percent) and tobacco products (+3.0 percent). Among services, higher prices were seen on net rents exclusive of heating expenses (+1.3 percent), transport services (+3.3 percent) and recreational and cultural services (+1.5 percent). In contrast, cost of telecommunication services declined further by 1.0 percent while package holidays fell by 3.1 percent.

Compared with December 2014, consumer prices dropped 1.1 percent in January. Cost of package holidays down the most by 19.5 percent, followed by clothing (-6.3 percent), footwear (-2.4 percent) and air travels (-2.6 percent). Prices of energy also declined by 3.2 percent, particularly for motor fuels (-5.8 percent) and heating oil (-12.3 percent). Other energy products such as electricity and gas fell by 0.5 percent and 0.2 percent respectively. In contrast, prices of food was up, particularly for vegetables (+5.8 percent). Prices also increased for road passenger transport (+5.2 percent), postal service (+1.7 percent) and health insurance services (+1.3 percent).

The harmonized index of consumer  prices (HICP) dropped by 0.5 percent in January of 2015 over the same month last year. Compared with the previous month, the index declined by 1.3 percent.

Germany Reports Deflation For The First Time in 5 Years

Destatis l Rida Husna l
2/12/2015 10:29:42 AM