BERLIN, (Reuters) – Although the German annual inflation rate slowed for the first month in six months, the figure remains well above that of the European Central Bank’s price stability goal of 2% across the entire euro zone, preliminary data from Thursday showed.

According to the German Federal Statistics Office, consumer prices harmonised so they can be compared with inflation data of other European Union members (HICP) rose 5.7% annually after a record 6.0% increase in November.

National consumer price index (CPI), rose 5.3% in the year to June 1992, the highest level since June 1992. This is a further acceleration of price pressures following an increase in inflation rates of 5.2% in November.

Germany’s full year HICP inflation rate shot up to 3.2% in 2021, from 0.4% one-year earlier. Meanwhile, the CPI inflation rates rose to 3.1% from 0.5% 2020.

The Statistics Office stated that there were many reasons for the high inflation rates observed since July 2021. They include base effects from low prices in 2020, when the economy crashed due to the first coronavirus outbreak.

According to the office, “In these circumstances, particularly the temporary reduction of value-added taxes (VAT), and the sharp drop in prices for mineral oil products had an upward effect upon the current overall rate of inflation.”

“Aside from market trends, there are additional factors such as the January 2021 introduction of CO2 Pricing and crises-related effects like marked price rises at the upstream stages of the economic process.

Officials from the German government and central bank policymakers expect that inflation will ease even more in the months ahead. Temporary effects such as temporary VAT cuts should diminish starting January.

Joerg Kraemer, analyst at Commerzbank (DE) said that it is indeed true that inflation should drop after the turning of the year. This was partly because of special factors.

The inflation risks for Germany, as well as the euro area are clearly on the rise. The ECB needs to get off the gas.