Inflation in Germany has descended well below the peaks reached after the start of the Russian war against Ukraine, declining to 2.5% in February, Germany's Federal Statistics Office announced on Tuesday.
This was the lowest rate recorded since June 2021, when inflation stood at 2.4%. The figures released by the agency on Tuesday confirmed earlier preliminary estimates.
An annual inflation rate of 2.9% was recorded in January following 3.7% in December.
"The price situation in the energy sector is continuing to ease. The rise in food prices has slowed considerably and is now below overall inflation for the first time in more than two years," said Destatis head Ruth Brand.
Higher inflation rates reduce the purchasing power of consumers. Many German consumers cut back on consumption last year.
February was the second month in a row that energy became cheaper, despite the price brakes that expired at the beginning of the year and the increase in the carbon dioxide (CO2) price to €45 ($46) per ton.
Energy prices fell by 2.4% compared to the same month last year.
Food cost 0.9% more than in February last year, meaning that the rate of increase has weakened and, according to the data, was below the general rate of price increases for the first time since November 2021.
In January, people still had to pay 3.8% more for food than a year earlier.
Following the start of the Russian war against Ukraine in February 2022, energy and food in particular became much more expensive and fuelled overall inflation in Germany.
In autumn 2022, the inflation rate temporarily reached its highest level since Germany's reunification in March 1991, soaring to 8.8%.
Consumer prices rose by 0.4% in February compared to the previous month.
According to the latest forecasts by two influential German economic think tanks, the ifo Institute and the Kiel Institute for the World Economy (IfW), inflation is expected to fall significantly throughout 2024.
Their forecasts projected consumer prices to rise by an average of just 2.3% this year, compared to 5.9% in 2023.
German Vice-Chancellor Robert Habeck recently said that he expects wage growth this year to exceed the inflation rate.
Real wage growth would likely boost Germany's economy, as private consumption may grow along with incomes.
The European Central Bank (ECB) has repeatedly raised key interest rates in the eurozone since the summer of 2022 in an effort to bring inflation back under 2%.
In February, the Harmonized Index of Consumer Prices (HICP), the key inflation indicator used by the ECB, was 2.7% in Germany.