By Xavier Fontdegloria


Germany's annual inflation rate fell more than expected in December, driven by lower energy costs as fuel prices dropped and the government implemented a one-off subsidy for consumers' utility bills.

The consumer price index--a measure of what consumers pay for goods and services--increased 8.6% in December on year measured by national standards, down from 10% in November, preliminary data from the German statistics office showed Tuesday. This marks the second consecutive fall in inflation, which currently stands at its lowest level since August.

Economists polled by The Wall Street Journal expected inflation to decrease to 8.8%.

Consumer prices rose 9.6% on year by European Union harmonized standards, easing from November's 11.3% increase.

The decline in inflation was driven by moderating energy prices, the data showed. Prices of household energy and motor fuels increased 24.4% on year in December, down from the 38.7% rise registered in November. Annual food inflation also eased, albeit only slightly, to 20.7% from 21.1% a month earlier.

The German government implemented a one-off discount for utility bills in December, before a cap of electricity and natural gas prices coming into effect from January to cushion households and businesses from high energy prices.

This policy had a downward effect on prices in December but the exact effect can't be quantified yet, Destatis said.


Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com


(END) Dow Jones Newswires

01-03-23 0828ET