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Though the peak may have passed, inflation has reached the breadth of the economy and it is premature to "sound the all-clear," said Fritzi Koehler-Geib, chief economist at the German development bank KfW.
Following two months of decline, inflation in Germany increased to 8.7 percent in January, according to preliminary figures published by the Federal Statistical Office (Destatis) on Thursday.
Inflation in Europe's largest economy hit 10.4 percent in October last year and fell to 8.6 percent in December, according to official figures.
"Although the peak has probably been passed, it is premature to sound the all-clear," said Fritzi Koehler-Geib, chief economist at the German development bank KfW, "Inflation has reached the breadth of the economy."
Soaring prices for energy and food have been the main drivers of inflation. To cushion the high prices for citizens, the German government passed extensive relief packages, including a "protective umbrella" to cap gas and electricity prices that worth 200 billion euros (215 billion U.S. dollars).
A first one-off payment to help citizens cover their gas and heating costs in December last year already had a downward effect on inflation, according to Destatis.
However, it is "difficult to gauge the effect of the various gas and electricity subsidies on the consumer price level," Axel Lindner, deputy head of the Department of Macroeconomics at the Halle Institute for Economic Research (IWH), told Xinhua on Thursday.
For 2023, the German government expects annual inflation to decline to 6 percent.
Although inflation will remain above historical levels this year, "the trend reversal has been initiated," the ministry for economic affairs and climate action (BMWK) said in a statement at the end of January, when it published its forecast.
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