German economic institute sees inflation slowing in 2023 as commodities, supply chain pressures ease.
Germany's inflation is expected to average 6.8% in 2022 and the slow to 3.3% in 2023, the Munich-based Ifo Institute said Wednesday. The growth outlook for 2022 has been downgraded from the March forecast as the war in Ukraine rumbles on, now seen at 2.5% vs the 3.1% seen three months ago. In 2023, growth is expected to accelerate to 3.7%.
“Economic output is currently still 1 percent below the pre-pandemic level of late 2019,” says Timo Wollmershauser, Head of Forecasts at ifo. “But we’re expecting a gradual decrease in both commodity prices and material bottlenecks in the second half of the year.”
Slowing inflation in 2023 will be good news for the ECB as they fight rising prices and the risk of fragmentation across the eurozone. The ECB's governing council are holding an ad hoc meeting Wednesday to discuss recent market turbulence.