Tyskland har siden sommeren haft deflation, dvs. faldende priser. Priserne faldt med 0,3 pct. i november mod 0,2 i oktober. Det er de laveste tal siden 2009. Det skyldes især de lave energipriser og en reduktion i momsen. Regeringen har sat momsen ned for at stimulere forbruget og dermed hjælpe virksomhederne på grund af coronaen. Men det er kun 60 pct. af momsnedsættelsen, der har ført til lavere priser – og som er endt i forbrugernes lommer. Resten er blevet i virksomhedernes kasse. Kort og godt: Lavere priser får ikke altid forbrugerne til at købe mere.
Germany: Deflation doesn’t always buy more stuff
Headline inflation continues its downward trend, leading to the longest deflationary streak since 2009
Based on the inflation outcomes in several regional states, German inflation came in at -0.3% year-on-year in November, from -0.2% in October.
The harmonised index, relevant for European Central Bank policymaking, dropped to -0.7% YoY, from -0.5% in October. Headline inflation has now been in negative territory since August. The last time German headline inflation was negative in four consecutive months was in 2009.
Measurement problems
The negative base effect from low energy prices and above all, the VAT cut in July are the reasons for this negative inflation streak. The VAT reduction is most visible in prices for clothing, other consumer goods and increasingly for other leisure activities and packaged holidays.
At the same time, the fact that the increase in hotel and restaurant prices is still very much in line with the trend seen prior to the VAT cut suggests that lower taxes are also used to support businesses and are not necessarily entirely passed on to consumers.
According to recent research by the Bundesbank, some 60% of the VAT reduction has been passed on to customers, with a pass-through of almost 100% for products like food, retail and industrial goods.
Indeed, looking at the top 100 components of the inflation measures, around 50% of the goods and services have recorded negative inflation rates since July. Until June, it was only around 20%. The last time deflation worries surfaced in 2014 and 2015, this was never more than 30%.
Looking ahead, after another negative reading in December, the path of headline inflation will depend on whether or not the German government sticks to its plan of reversing the VAT reduction in January.
More generally speaking, measuring inflation properly has been complicated by the pandemic.Not all prices could be collected. And lifestyle and spending changes due to the pandemic are currently not really captured in price indices.
Recalling and paraphrasing Mario Draghi, Germany is currently experiencing deflationary trends which won’t necessarily buy more goods.
