**Reuters: German Inflation At 2.4% In October**

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Post on Nov 13, 2024

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Reuters: German Inflation at 2.4% in October, Signaling Continued Price Pressure

BERLIN, Oct. 31 (Reuters) - Germany's annual inflation rate edged down to 2.4% in October, according to preliminary data released by the Federal Statistics Office (Destatis) on Tuesday. This figure follows a rate of 2.5% in September and remains above the European Central Bank's (ECB) target of 2%.

Persistent Price Increases

The latest data suggests that price pressures remain persistent in Germany, driven by factors such as supply chain disruptions, rising energy costs, and a strong demand environment. While the inflation rate has moderated slightly from its peak in July, it remains significantly higher than the pre-pandemic levels.

"The slight decline in inflation is welcome news, but it is too early to declare victory," said Carsten Brzeski, head of macro research at ING Germany. "The underlying inflation pressures remain high, and we expect inflation to remain elevated in the coming months."

Core Inflation Remains Elevated

Core inflation, which excludes volatile food and energy prices, climbed to 4.1% in October from 3.9% in September. This indicates that price pressures are becoming more widespread, extending beyond the initial drivers of energy and food.

"The rise in core inflation is particularly worrying, as it suggests that inflation is becoming more entrenched," noted economists at Commerzbank. "This could force the ECB to continue raising interest rates in order to bring inflation back under control."

ECB Response

The ECB has been raising interest rates aggressively in recent months to combat inflation. The latest data is likely to reinforce the central bank's commitment to further tightening monetary policy, even as the global economic outlook deteriorates.

"The ECB is likely to maintain its hawkish stance, as long as inflation remains above target," said Holger Schmieding, chief economist at Berenberg. "However, the bank will need to carefully monitor the economic impact of its policy decisions, given the risks of a recession."

Outlook

The outlook for German inflation remains uncertain. While a decline in energy prices could provide some relief, the ongoing war in Ukraine and the global energy crisis continue to pose significant risks.

"The German economy is facing a number of headwinds, and inflation is one of the biggest challenges," said Franziska Palmas, senior economist at Capital Economics. "We expect inflation to remain elevated in the near term, but a decline is likely in 2023."

Key Takeaways:

• German inflation edged down to 2.4% in October, but remained above the ECB's target.
• Core inflation rose to 4.1%, indicating broader price pressures.
• The ECB is likely to continue raising interest rates to combat inflation.
• The outlook for German inflation remains uncertain, with risks from the war in Ukraine and the global energy crisis.

This article is based on information from Reuters. For the latest updates and analysis, please refer to the official Reuters website.