Persisting High Inflation Levels
The consumer price inflation trend across different German states in April 2023 showed a mixed but generally moderating pattern, with notable differences in food and energy prices.
Germany's consumer price inflation was confirmed at around 2.1% in April 2023, marking a moderation compared to previous months and continuing a trend of easing inflation pressures nationally. This decline in energy prices, particularly a sharp decrease of around -5.3% year-on-year, was driven by falling costs for motor fuels, heating oil, and solid fuels. This decline in energy prices helped to ease inflationary pressures overall.
However, food prices continued to rise, with increases around +3.1%. This persistent food inflation reflects ongoing supply chain challenges and higher production costs affecting household budgets. Some German states saw inflation rates ease, such as Bavaria, North Rhine-Westphalia, and Lower Saxony, where inflation dropped between 0.3 and 0.5 percentage points. However, Baden-Württemberg experienced a slight uptick in inflation from 2.2% to 2.3%, indicating some regional divergence.
In the category of food items, prices for edible fats and oils decreased by 2.3% compared to March 2023, but bread and grain products increased by 0.7%. Prices for cookies increased by 4.4% and prices for pizza, quiches, etc. increased by 3.6% in the category of bread and grain products in April 2023 compared to March 2023. Carrots, quark, and cream saw disproportionate increases in price compared to other food items, with carrots increasing by 68.8%, quark by 65.6%, and cream by 45.6%.
Services inflation remained relatively high, around +3.9 to 4.5%, indicating wage and labor market pressures. Industrial goods prices excluding energy rose modestly (+0.8%), reflecting easing supply chain issues.
In summary, April 2023 inflation in Germany was characterized by a decline in energy prices but an increase in food costs, with regional differences showing a general easing trend in most states except Baden-Württemberg. The ongoing rise in food prices remains a key concern amidst overall moderating inflation.
In the broader economic context, the declining energy prices in Germany, as seen in April 2023, contributed to a reduction in overall inflationary pressures within the finance sector. Conversely, the persistent rise in food prices, particularly carsrots, quark, and cream, despite a moderating trend in most states, continues to pose a significant challenge for household budgets and the finance industry.
