- Decrease in the officially calculated rate of price increase reasoned?
Right now, a liter of gasoline in Germany is going for about 1.70 euros, which is around 20 cents cheaper than it was during the spring. This is also the cheapest it's been in over a year and a half. Similarly, diesel and heating oil have seen a decrease in price, causing a drop in the overall inflation rate. As reported by the Federal Statistical Office, the inflation rate in August was 1.9%, making it the smallest increase in over three and a half years.
Looking at Inflation Closely
Despite this optimistic outlook, it's important to tread carefully. The fact that oil products are priced in US dollars means that the weakness of the dollar against the euro has resulted in more affordable fuel. However, this advantage may not last forever. If the dollar's price increases, so too will the cost of gasoline.
Furthermore, inflation has continued to be high in areas other than fuel stations. When you exclude energy and food prices, the inflation rate in August was 2.8%. This helps explain why consumers are still being cautious, even with rising real wages.
The Rising Wage Issue
Consumers' wariness isn't unjustified. As wages rise, so do the prices of goods and services, a trend that can be seen at hair salons, in the restaurant industry, and on craftsmen's bills. Economists anticipate that inflation will remain manageable in the short term, but they haven't declared an all-clear just yet. Historically, higher production costs have eventually resulted in higher prices on store shelves. The question now is how much and when this will happen. The inflation rate in the coming months will provide the answer.
The Federal average for gasoline prices in the United States currently sits lower than the spring average, but an increase in the dollar's value could potentially make it more expensive. Despite the decrease in fuel prices, other inflation rates such as the 2.8% observed in August when excluding energy and food costs, remain relatively high.
