The reduced VAT
and falling energy costs
press the German inflation rate
to its lowest level since the beginning of 2015. Consumer prices fell in November 0.3 percent compared to the same month last year
as announced by the Federal Statistical Office. Economists had expected a value of minus 0.1 percent, after an annual tax rate of minus 0.2 percent in September and October. For the European Central Bank (ECB), falling prices in the largest economy in the currency union are a problem, as it is aiming for an inflation rate of just under two percent in the euro area.
The federal government will temporarily reduce VAT from 19 to 16 percent from July to the end of 2020 in order to stimulate consumption and the economy during the Corona crisis. “The inflation rate is influenced, among other things, by the VAT cut that has been in force since July 1, 2020,” it said. Goods were cheaper in November by an average of 1.8 percent. They fell Energy prices particularly strong at minus 7.7 percent. food prices rose by 1.4 percent and thus just as much as before. Services cost 1.1 percent more than a year ago, with net rents rising by 1.3 percent. Total consumer prices fell 0.8 percent from October to November.