Tumbling energy prices help bring German inflation back to pre-crisis levels

Falling energy prices continue to pull down overall inflation in Germany, which in February receded to its lowest level since mid-2021, the country’s statistical office Destatis announced. After a spike in the cost of gas, oil, electricity and other power sources in the energy crisis that had pushed inflation to its highest level in decades, the overall price increase fell to 2.5 percent in the second month of this year, compared to the same month of the previous year. “The energy price situation continues to calm down,” Destatis head Ruth Brand commented. Even though the energy price caps introduced at the height of the energy crisis ended at the beginning of 2024 and prices for carbon emissions rose, energy prices on average were 2.4 percent lower in February than one year before, after a fall of 2.8 percent in January. Household electricity prices dropped nearly 8 percent and gas prices 7.5 percent in February. At the same time, falling food prices also helped bring down overall inflation, Brand added. However, excluding energy and food in the index to calculate the so-called core inflation, prices still increased 3.4 percent in February, Destatis added.

Price comparison webiste Verivox last week said that heating costs for German households had fallen significantly compared to one year before, as gas prices dropped 38 percent and oil prices 18 percent. Lower costs were partly made possible by mild weather, which reduced heating demand, Verivox said. Thanks to unusually high temperatures in winter, demand for heating energy fell 6 percent in an average family home compared to the previous year, it added.