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STATISTICS

Inflation hits record low in 2009

German inflation averaged 0.4 percent in 2009, its lowest level in 10 years, provisional figures released on Tuesday by the national statistics office showed.

Inflation hits record low in 2009
Photo: DPA

In 2008, consumer prices gained 2.6 percent in Europe’s biggest economy, a level last seen in 1994, according to data provided by the Destatis office.

Lower energy and food prices compared with peaks in 2008 have kept inflation down in Germany, while rising unemployment has also prevented workers from demanding substantially higher wages.

The last time inflation was anywhere near this low was in 1999 when it reached 0.6 percent, Destatis said.

Inflation even dipped briefly into negative territory in the middle of this year, reaching minus 0.5 percent in July, the lowest rate since 1987.

Towards the end of this year prices have perked up however, gaining 0.8 percent in December compared with the same month a year earlier.

Destatis releases a provisional estimate based on six representative German states, and is to publish the final figure on January 14.

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ECB

Inflation rose in Germany in December: report

Inflation in Europe's largest economy Germany clambered higher in December, official data showed Friday, but remained short of the European Central Bank's target for the 19-nation eurozone.

Inflation rose in Germany in December: report
Prices in Germany are rising, but not as fast as they should be. Photo: Jens Büttner / zb / dpa
Price growth hit 1.5 percent year-on-year last month, statistics authority Destatis said, some 0.4 percentage points higher than in November.
   
And it reached the same level when measured using the Harmonised Index of Consumer Prices (HICP) yardstick preferred by the ECB.
   
But while German price growth was headed in the right direction, it was still well short of the ECB's just-below-two-percent goal. Over the full year 2019, inflation averaged just 1.4 percent.
   
“There is little sign of sustained growing price pressure that could prompt the ECB to rethink its ultra-expansive monetary policy,” said economist Uwe Burkert of LBBW bank.
 
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Here's a graph put together by the German newswire DPA, showing how the inflation rate in Germany has fluctuated between 2008 and 2019. 
 
 
 
The ECB has set interest rates at historic lows, granted hundreds of billions of euros in cheap loans to banks, and bought more than 2.6 trillion euros ($2.9 trillion) of bonds in efforts to keep credit flowing to the economy, stoking growth and inflation.
   
But it has fallen short of its eurozone-wide price growth target for years, predicting last month it would inch up to just 1.6 percent by 2022.
   
Economists have pointed to both uncertainty over political events, like trade wars and Brexit, and long-term developments like ageing populations as possible reasons for sluggish growth and inflation.
   
Under new chief Christine Lagarde, the ECB plans to launch a wide-ranging “strategic review” this year, its first since 2003, that could adjust its tools or even reexamine the inflation target itself.
   
In the meantime, she has urged countries — like Germany — with sound government finances to lift spending in hopes of juicing the economy.
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