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German inflation surprises again to the downside - ECB mission accomplished?

German consumer prices in November 2023 fell more than expected, registering a 2.3% year-over-year (YoY) decrease in harmonized terms, compared to the anticipated 2.5% YoY. This decrease aligns with earlier inflation data from Germany's largest states, Bavaria and Baden-Württemberg. Energy remains a significant factor in reducing overall inflation, with energy prices dropping by 4.5% YoY, largely due to base effects. Meanwhile, food inflation, which stands at 5.5% YoY, has also moderated from previous months. Inflation rates for services and goods are currently at 3.4% and 3.0% YoY, respectively.

Given that inflation is rapidly approaching the European Central Bank's (ECB) 2% target and real interest rates are becoming increasingly restrictive, it appears that the ECB has achieved its goal.


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