WIESBADEN - Following low inflation rates - as measured by the consumer price index - in the first half of the year, the rate of price increase rose towards the end of 2016, reaching its highest level of the year in December 2016 ( 1.7%). The Federal Statistical Office (Destatis) also reports that a higher inflation rate was last recorded in July 2013 ( 1.9%). On an annual average in 2016, the consumer prices in Germany rose 0.5% on 2015. The year-on-year rate of price increase thus was slightly above previous years level (2015: 0.3%).
The low 2016 inflation rate was largely due to the development of energy product prices. On the whole, prices of energy products fell markedly by 5.4% in 2016 on 2015. The downward effect on prices, however, was smaller than in the previous year (2015: -7.0% on 2014). Price decreases were recorded in 2016 especially for mineral oil products (-9.3%, of which heating oil: -16.9%; motor fuels: -7.3%) and charges for central and district heating (-8.5%). For gas, too, price decreases were observed on an annual average (-3.0%). Only electricity prices rose in 2016 ( 0.6% on 2015). Excluding energy prices, the inflation rate in 2016 would have been markedly higher ( 1.2%).
Food prices (total) increased 0.8% in 2016 year on year. Unlike energy prices, they had an upward effect on prices as a whole on an annual average. However, there were some clearly opposite developments: Prices were up especially for vegetables ( 3.7%), fruit ( 3.6%) and fish and fish products ( 3.3%). In contrast, consumers paid markedly less for dairy products (-4.4%).
The prices of goods (total) fell by 0.4% in 2016 compared with 2015, the main reason being the decrease in energy prices (-5.4%). However, some goods became more expensive, besides food, for example, tobacco products ( 3.6%) as well as newspapers, books and stationery ( 3.0%). Contrary to goods, the prices of services (total) increased in 2016 compared with 2015 ( 1.3%, including net rents exclusive of heating expenses: 1.2%). Marked price increases were observed here, among other things, for services of social facilities ( 4.0%), insurance services ( 2.4%) and catering services ( 2.2%). As in the previous years, lower prices were however recorded for telecommunications services (-1.5%). In 2016, there were price decreases worth mentioning also for package holidays (-0.8% on 2015).
Energy prices had a considerable effect on the inflation rate in December 2016. Energy prices (total) were up 2.5% in December 2016 on the same month a year earlier. In the first eleven months of 2016, only price decreases had been recorded on the relevant months of the previous year (last time in November 2016: -2.7%). Prices in December 2016 were up year on year, above all, for mineral oil products ( 9.0%, of which heating oil: 21.9%; motor fuels: 6.0%). Prices were slightly up also for electricity ( 0.9%) and solid fuels ( 0.1%). Marked decreases were recorded for charges for central and district heating (-6.4%) and gas prices (-2.7%). Excluding energy prices, the inflation rate in December 2016 would have been 1.6%, that is, markedly higher than in the preceding months.
Food prices, too, were markedly higher ( 2.5%) in December 2016 than in December 2015 (November 2016: 1.2%). In December 2016, prices of edible fats and oils ( 12.3%) and of vegetables ( 9.7%) were markedly up on a year earlier. Compared with December 2015, higher prices were recorded for all other food groups, too, such as fish and fish products ( 3.3%), fruit ( 1.4%) and confectionery ( 1.3%).
The prices of goods (total) rose 1.8% in December 2016 year on year, above all due to the increases in energy and food prices. The prices of services (total) were up 1.5% in the same period, which was mainly the result of the development of net rents exclusive of heating expenses ( 1.5%). Still larger price increases were recorded, among other things, for maintenance and repair of vehicles ( 2.3%), insurance services ( 2.3%) and services of social facilities ( 4.3%). Prices of telecommunications services were slightly down (-1.2%).
Compared with the previous month, the total consumer price index rose markedly by 0.7% in December 2016. As regards services, the seasonal price increase for package holidays ( 20.9%) should be mentioned. Consumers had to pay more also for air tickets ( 2.0%) in December 2016. Also, rail fares were up towards the end of 2016 as a result of the annual adjustments of railway fares ( 2.0%, of which short-distance transport: 4.9%; long-distance transport: 1.3%). As regards goods, prices increased in December 2016 year on year especially for energy ( 2.3%, including heating oil: 11.7%; motor fuels: 3.6%) and also for food ( 0.9%, including vegetables: 7.1%). However, there were few price decreases worth mentioning at the end of the year. A favourable development for consumers was the price decreases for clothing and footwear, which in some cases were considerable. The prices for the whole product group were down 2.3%.