Germany Inflation Go Higher In December

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Germany Inflation Go Higher In December

Germany'S Inflation Touched 3.8% In December

According to the latest data, the base effects pushed Germany's Inflation in December 2023. As a result of this sudden jump, the downward trend in inflation was stopped.

The shift in inflation has given the European Central Bank (ECB) an excuse not to touch the interest rate policy for some time.

Inflation Moves From 2.3% Y/Y To 3.8% Y/Y

3.8% Y/Y jump was seen in December's inflation reading. This was mostly in line with the 3rd party analysts. However, the 3.8% reading was a lot higher than the November's reading of 2.3%.

According to ING's analyst, the sudden resurgence of Inflation is a sign that the ECB will remain on its current path with no change in the near term. They also added that the recent reading indicates that the ECB needs time before moving into rate cuts.

Germany's inflation data also provides close insights into the EU's inflation data as it is released a day before. Given the surprise from Germany's side, we will also see a similar trend in the EU's Inflation reading.

As per the forecasts, the EU inflation will likely touch 3% in the last month of 2023. That will be a big jump from November's print of 2.4%.

Last month, even the ECB's president talked about inflation risks & and it looks like the same thing has happened! As per the statistics, the increase in the inflation reading is mainly driven by energy prices.

Furthermore, the German authorities are also working to cut costs in the 2024 budget. That's also a factor that will further fuel higher inflation in January 2024.

And when we consider the wage growth in Germany, the Inflation will likely stay close to 3% for the rest of 2024, as opposed to the 2% target. In December, the food prices in Germany also jumped by 4.5% Y/Y while the previous reading was 5.5%.

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