ZEW - Centre for European Economic Research

04/02/2024 | Press release | Distributed by Public on 04/03/2024 01:13

ZEW Economist Friedrich Heinemann on the Inflation Figure // “Purchasing Power Rises, Interest Rates Fall” (March 2024)

"Purchasing Power Rises, Interest Rates Fall" (March 2024)

ZEW economist Friedrich Heinemann comments on the development of the German inflation rate in January 2023.

In March 2024, the Federal Statistical Office published its preliminary results on the progression of the German inflation rate. According to the calculations, the inflation rate measured by the German consumer price index fell from 2.5 per cent to 2.2 per cent. Friedrich Heinemann, head of the Research Unit "Corporate Taxation and Public Finance" at ZEW Mannheim and professor at Heidelberg University, has commented on the matter:

"Not only in Germany is the inflation rate declining. In the other two major eurozone countries, Italy and France, the European Central Bank's two per cent inflation target has either already been reached or is within sight. This development has two consequences, both of which are positive for the economic outlook. Firstly, purchasing power is increasing almost everywhere in the eurozone. In Germany, for example, pension increases this year are expected to be a substantial two percentage points above inflation. Secondly, the path for ECB interest rate cuts will be clear from June onwards. This is good for investments. However, savers need to act quickly to secure higher interest rates for a longer period now, as soon the terms for savings accounts will noticeably decrease."