2023 will be a year of disinflation – but one danger remains

Dusseldorf There is no doubt that 2022 will go down in history as the year inflation returned – with a force even pessimists would not have believed possible. The current year will be one of disinflation, i.e. one of falling inflation rates – simply because of the base effects.

There were already indications of this at the end of the year, and the latest data from the USA confirm this trend: In December, price increases in the USA were 6.5 percent, after 7.1 percent in November. The same applies to Europe. In December, the inflation rate in the euro area fell to 9.2 percent.

Despite all the joy about this development, this trend is by no means an all-clear for the central banks. Because there is a second trend that should alarm the central banks. The reason for the slowdown in price dynamics over the past few months and presumably also in the coming months is the significant fall in energy prices.