Germany’s inflation rate in May 2023 stood at +6.1%, according to the Federal Statistical Office (Destatis). While the rate has slowed compared to the previous two months, it remains at a high level. The year-on-year increase in energy prices was notably smaller in May, contributing to the overall slowdown in inflation. However, food prices continued to be the primary driver of inflation. Consumer prices in May 2023 also saw a slight decrease of 0.1% compared to April 2023.
The prices of energy products increased by 2.6% compared to the previous year, indicating a notable slowdown in the rate of increase. This is attributed to several factors, including base effects from last year’s substantial price increases due to the Russian attack on Ukraine. Government measures, such as price caps on electricity, natural gas, and district heating, also played a role in slowing the energy price increase.
Food prices rose by 14.9% in May 2023 compared to the same month a year earlier, although the rate of increase slowed slightly. Dairy products, bread and cereals, and fish products were among the categories with significant price rises. However, edible fats and oils, particularly butter, experienced price decreases.
Excluding energy and food prices, the inflation rate stood at +5.4% in May 2023, highlighting the significant impact of food prices on overall inflation. The prices of goods increased by 7.7% compared to May 2022, with non-durable consumer goods, primarily influenced by rising food prices, experiencing the highest increase. Service prices rose by 4.5%, with net rents and the introduction of the Germany ticket for public transport contributing to the moderation of price increases.
In a month-on-month comparison, the consumer price index in May 2023 decreased by 0.1%, driven by declines in food and energy prices. The Germany ticket’s introduction resulted in lower prices for public transportation, while package holidays and overnight stays saw price increases.
The data reflects the impacts of government relief measures aimed at containing energy price increases and the ongoing influence of the Russian-Ukrainian conflict on energy prices. The divergence between the consumer price index (CPI) and the harmonized index of consumer prices (HICP) is attributed to differences in coverage and methodology, with the CPI encompassing a broader range of expenditures.
Overall, while Germany’s inflation rate has slowed in May 2023, it remains at a high level, with food prices continuing to drive inflationary pressures.