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Staying low

December 29, 2009

German consumers have gotten a break this year as prices have held steady. The inflation rate is likely to be a mere 0.4 percent for 2009, the lowest 12-month average in 20 years.

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Shopping cart with produce Inflation is currently not an issue of great concern
Grocery prices have not gone up much in GermanyImage: AP

The global recession put the brakes on Germany's export-driven economy this year, leading to a stagnation in prices. Statisticians say that low oil prices have helped keep prices down.

The low inflation rate reported Tuesday by Germany's Federal Statistics Office stands in sharp contrast to 2008, when German retail price inflation averaged over 12 months came in at 2.6 percent.

Tuesday's data is not final, but rather based on December price reports from six German states. The official rate is not expected to differ much from this projection, statisticians say.

German inflation data can only be applied back to 1990, when capitalist West Germany and formerly communist East Germany united.

Hands holding coins
Inflation's not an issue right nowImage: picture-alliance / Helga Lade Fotoagentur GmbH

How low can you go?

Experts believe that prices will remain low in 2010, particularly for groceries. Against the background of the financial crisis, stores worry that increasing prices could drive away customers, Wolfgang Twardawa of the GfK market research group told APD.

Additionally, the popularity of discount grocery stores has helped generally push prices down. That, in turn, has hurt farmers, the German Farmers Association noted Tuesday.

th/dpa/APD/AFP

Editor: Susan Houlton

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