Germany: 2 %’s ‘block’ was broken by inflation in Hesse

It continued to decrease in March, according to the first figures from the Lands. Consumer prices increased at a slower rate in Baden-Württemberg, Bavaria, Brandenburg, Hesse, North Rhine-Westphalia and Saxony than in February. They increased between 1.6% and 2.8% compared to the same month last year, as state statistical agencies announced today (02.04.24). In February, the national inflation rate was still 2.5%. Economists participating in a Reuters poll reported that it retreated to 2.2% in March, the lowest inflation rate for nearly three years. This afternoon, the Federal Statistical Office will publish an initial estimate for the whole of Germany based on data from the six countries. Inflation is particularly low in Hesse, where 1.6% is much lower than the European Central Bank (ECB)’s target of 2% inflation. The fall in inflation was mainly due to cheaper energy. In Hesse, for example, it cost 5.4% less than in March 2023, while food prices fell by 1.4%. The fall in company expectations for prices, which declined to the lowest level in the last three years in March, suggests an ongoing fall in the following months. The barometer retreated to 14.3 units from 15.0 in February, according to the Institute Ifo based in Munich in his business research. “Inflation is still retreating and is likely to fall below the two percent limit in the summer,” Ifo’s head of financial forecasts, Timo Wolfmershäuser said. “From the German side, there is nothing to prevent the ECB from reducing interest rates soon”.