German Inflation Drops to 21-Month Low as Food and Energy Prices Ease

• Inflation in Germany fell to 2.2% in March, the lowest since May 2021, due to falling food and energy prices • Food prices dropped 0.7% year-over-year, the first decline since Feb 2015, with large falls in vegetables, oils, and dairy
• Energy prices were 2.7% lower than last year despite carbon levy and price brake abolition, aided by 4.6% fall for households • Inflation excluding food and energy was 3.3% with rises in airfares, package holidays, and clothing pushing up costs • VAT reduction on gas will likely end soon, leading to a price surge in gas and heating, offsetting lower inflation elsewhere