German annual inflation rate declined to 0.3 percent in 2015, hitting the lowest level since 2009, official data showed on Tuesday.
The inflation rate measured by consumer price index (CPI) has been declining since 2011, according to German federal statistics office Destatis. In 2014, the consumer prices rose by 0.9 percent annually
. "The low 2015 year-on-year rate of price increase was largely due to the development of energy product prices ...This was mainly the result of the sharp decline in crude oil prices in the world market," said Destatis in a statement.
In 2015, energy prices slumped by 7 percent. In December 2015, German annual inflation rate also amounted to 0.3 percent. While weak increase of prices seems encouraging for consumers, it will harm the economy if the trend lasted too long and the inflation too low.
Consumers might postpone their purchases due to expectations of prices decreasing. The European Central Bank (ECB) considered an annual inflation rate "below but close to 2 percent" as being beneficial for the economy.
Its stimulating measures including interests cutting and bonds purchasing, however, have yet received desired results. The inflation rate in Germany was well below one percent in every month of 2015.
If measured by harmonized index of consumer prices (HICP), a yardstick used by the ECB, German annual inflation rate amounted only to 0.1 percent in 2015. In December 2015, German HICP inflation rate stood at 0.2 percent, the same as the level of the whole euro zone.
The ECB decided last month to extend its quantitative easing policy via bonds and securities purchasing by six months to March 2017. Mario Draghi, President of the ECB, was scheduled on Thursday to introduce the central bank's latest assessment of the euro zone economy and decisions on monetary policies.
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