Inflation in Germany hits a 70-year High

German annual inflation accelerated in September to 10%, hitting the highest level in more than 70 years, according to final unrevised data from Germany's official statistics agency Destatis.

The consumer price index (CPI) rose 1.9 percent in September from August, when it rose 0.3 percent, marking the strongest monthly gain since March, when it jumped 2.5 percent.

Annual inflation accelerated sharply in September to 10% from 7.9% in August. This is the biggest increase in German inflation since as far back as 1951, when it rose by nearly 11 percent.

Graph of inflation in Germany on an annual basis

Consumer prices in Germany continue to rise as a result of the deepening energy crisis in Europe's largest economy, as well as continued disruptions to supply chains.

"The inflation rate reached a new record high in the history of reunified Germany of 10 percent," noted Dr. Georg Thiel, president of the Federal Statistical Office, and explained:

"The main reasons for high inflation are still huge increases in the prices of energy products. But we are also increasingly seeing price increases for many other goods, especially food. In addition, the end of the government subsidy for a €9 transport ticket and of fuel rebates increased the price increase in September 2022."

In September, annual energy price growth deepened to 43.9% from 35.6% in August, with a particularly strong growth of 51.8% in household energy bills: fuel oil prices increased more than two times in one year (with 108.4%), and those of natural gas - with 95.1 percent. Consumer electricity prices rose in September by 30.5% after a 16.5% increase in August.

Food prices increased by 18.7% year-on-year after increasing by 16.6% in August. Edible fats and oil (by 49%), as well as dairy products and eggs (by 29.1%) are noticeably more expensive. Consumer prices also increased significantly for meat and meat products (by 19.5%) and for bread and grain products (by 18.5%).

Harmonized consumer inflation (HICP index according to common European standards) grew in September by 2.2% on a non-monthly basis (after an increase of 0.4% in August) and by as much as 10.9% on an annual basis (after growth of 8. 8% in August).

Data confirm that the problem of high inflation, both in Germany and across Europe, remains unresolved and will strengthen expectations that the European Central Bank may raise its main interest rates more aggressively (by 75 basis points) at its next meeting on October 27 points instead of 50 points).

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