Inflation in Germany is negative for the fifth month in a row in December. The average price level decreased by 0.7 per cent compared to a year earlier, reported the German Federal Statistical level. It is the lowest level of inflation in more than a decade.
The negative inflation rate is largely caused by a temporary VAT reduction introduced by the German authorities as a measure to counter the coronacrisis. Economist Carsten Brzeski van ING therefore assumes that December will be the last month with falling prices, as the VAT reduction will soon come to an end. Another reason for the negative inflation, the fall in energy prices due to low oil prices, is also fading away.
In France, inflation also fell. The price level did not increase, but it did not decrease. In November, French inflation was 0.2% on an annual basis.