Germany December CPI Preliminary Up 8.6% YoY...Significantly Eased MoM

Energy Price Increase Rate Slows Down Due to Gas Bill Subsidy Policy

The Berlin Cathedral in Berlin, the capital of Germany, is shrouded in darkness as part of an energy-saving policy. [Image source=Yonhap News]

[Asia Economy Reporter Chunhee Lee] Germany's consumer price index (CPI) inflation rate for December has significantly eased. This appears to be the effect of the German government's gas bill subsidy policy implemented last month.

According to the German Federal Statistical Office (Destatis) on the 3rd (local time), the preliminary CPI for Germany in November rose 8.6% year-on-year. This is a considerable decrease from the finalized figure of 10.0% in the previous month. The November preliminary figure was also below market experts' expectations of 9.1%. Consequently, the average annual inflation rate for last year was projected at 7.9%.

The preliminary CPI for December fell 0.8% month-on-month, continuing a two-month consecutive decline following a 0.5% drop in November.

The Harmonized Index of Consumer Prices (HICP), based on the European Central Bank (ECB) standards, fell 1.2% month-on-month and rose 9.6% year-on-year. The annual average HICP inflation rate was forecasted at 8.7%.

The German Statistical Office explained that since the start of the Ukraine war, energy and food prices have risen sharply, significantly impacting the inflation rate. Food prices in December were expected to increase by 20.7% year-on-year, and energy prices by 24.4%.

However, in response to this energy crisis, the German government implemented a policy last month to cover citizens' gas bills for one month, which is seen as a factor in the price decline. The preliminary energy price increase for December was 14.3 percentage points lower year-on-year compared to the 38.7% rise in the previous month. The German Statistical Office also added that it is still difficult to quantify the exact effect of this support.