The inflation rate in Germany remained stable at 2.1% in May 2025, the same value as in April, marking the lowest level since October 2024. This stability is mainly due to a reduction in energy prices, which continue to decline. In April, energy prices fell by 5.4% compared to the previous year, while they decreased by 4.6% in May. At the same time, food prices continued to rise, driving inflation up. The food price index remained at 2.8% in May, the same level as in April.
Impact on Purchasing Power and Saving Behavior
Purchasing Power of Consumers
The rising food prices lead to a decrease in the purchasing power of consumers, as a larger share of their income must be spent on food. This can lead to a reduction in spending in other areas.
Saving Behavior
Consumers might adjust their saving behavior by spending less on non-essential goods and instead saving more or investing in necessary expenditures. The stability of the inflation rate could also provide some planning security, which may positively influence saving behavior.
Economic Impact
The stagnation of the inflation rate coupled with rising food prices could also have economic implications. The German economy is expected to stagnate this year, with private consumption expenditures potentially rising slightly, supported by increased purchasing power and lower interest rates.
Summary
Overall, the inflation rate in Germany remains stable, attributed to the relief in energy prices. At the same time, rising food prices drive inflation up and impact consumers’ purchasing power. These developments have direct effects on saving behavior and the economic situation in Germany.