The increase in food prices continued to be steep at 20.7 percent. Energy and food prices in particular have increased considerably since the start of the Russia-Ukraine conflict and "had a substantial impact on the inflation rate," Destatis noted.
Despite the government's measures, consumers in Germany were still paying 24.4 percent more for energy products, including household energy and motor fuels, than a year ago. The increase in energy prices slowed down, however, after Germans received one-off payments to help them cover their gas and heating costs.
Within less than a year, the German government adopted three relief packages totaling 95 billion euros (100.3 billion U.S. dollars). A "protective umbrella" worth another 200 billion euros was set up to finance a cap on gas and electricity prices.
In its recently published winter forecast, the German Kiel Institute for the World Economy (IfW Kiel) lowered its inflation estimate for 2023 from 8.7 percent to 5.4 percent.
In order to drive down inflation, the German government paid a "high fiscal price via massive subsidies that only superficially alleviate the energy crisis," warned Stefan Kooths, vice president and head of economic forecasting at IfW Kiel. "The aid is far too broadly based and thus increases inflationary pressure elsewhere in the economy." (1 euro = 1.06 U.S. dollar)
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