It is official: Prices in Germany have remained stable. According to figures released by the Federal Statistics Office on Wednesday, the annual inflation rate is sitting at 0 percent. This result confirmed earlier estimates made by German economists. It also allays fears of either rapid inflation as a result of various government stimulus schemes which have pumped billions into the economy; or deflation as a consequence of unemployment and slower growth.
In July consumer prices were down -0.5 percent compared to last year. Then from July to August German consumer prices rose, bringing the overall inflation rate to zero. The Federal Statistics Office suggests that the rise is due to increases in the costs of heating oil and fuels.
In a statement the Statistics Office said that the results came despite the fact that, "prices of many goods and services in August 2009 were markedly higher or lower than a year earlier. The 'zero' results from the fact that price increases and price decreases offset each other because the inflation rate is calculated as a weighted average of all changes in consumer prices."
Lower Oil Prices
Among the items that saw a dramatic price increase were rented cars, honey and the sorts of equipment used to play computer games -- such as joysticks and gaming consoles. The items whose prices dropped dramatically included heating oil, lemons and television sets.
In a Wednesday statement on the recession by the Association of German Banks (BdB), which represents the interests of the private commercial banks, the association's economists also commented on current inflation rates in Germany. The fact that consumer prices in Europe are holding steady and low "is a result of the price dampening effect of the reduction in oil prices in 2008," they said.
They predicted similarly low figures for September and October and they did not expect figures to rise into the positives -- a return to inflation -- until the end of 2009 or beginning of 2010. This would be in part because prices for energy and raw materials had gone up again, the BdB wrote. "We don't see any possibility of rapidly accelerated inflation though," the economists wrote.
Export Orders On the Up
The news comes on the back of other positive reports. Figures released earlier this week confirmed that industrial orders in the European Union's biggest economy have continued to rise. Industrial orders rose by 3.5 percent in July according to figures released by the German Economics Ministry. This makes July the fifth month in a row that has seen an increase. German export orders also went up, increasing by 2.3 percent, according to figures from the Federal Statistics Office released on Tuesday. And economists are revising their predictions for growth upwards. On Wednesday the Kiel-based Institute for the World Economy (IfW) announced that the increase in export orders was likely to push Germany out of recession in 2010 with an expected growth rate of 1 percent.
Nonetheless other experts continue to counsel caution with some economists still worrying that rising unemployment may put a dampener on the country's slow recovery from recession. And a report from the United Nations Conference on Trade and Development (UNCTAD) about the global economic situation was also cautious. It said that the recession was not yet over and that, although there were positive signs in Europe, any recovery would take time.