German inflation this year receded to just 0.4 per cent, the lowest 12-month average since modern Germany was formed 20 years ago by reunifying two separate states, statisticians said Tuesday, according to dpa. The world recession has put the brakes on the German economy, which contracted for four quarters before picking up weakly in the second quarter of this year. Tuesday"s data from the Federal Statistics Office is not final, as it is based on December price reports from a few major states, but the ultimate official rate for the year is not expected to be much different. The data series only applies back to 1990, when capitalist West Germany and formerly communist East Germany re-unified. A full-year rate averages out the inflation rates which have been posted month by month, always comparing prices with a year ago. In the summer of this year prices practically stagnated. However, the basket of goods and services cost 0.8 per cent more in December 2009 than it did in December 2008. Combining that range of rates led to the figure of 0.4 per cent for the entire year. Back in 2008, German retail price inflation averaged out over 12 months to an unusually high 2.6 per cent after oil prices soared. The European Central Bank has an official objective of keeping euro zone inflation to below 2 per cent. The lowest previous average in the past two decades was 0.6 per cent in 1999. With the rates for the previous 11 months of this year already known, statisticians had been waiting for the December prices of goods and services to complete the data. They said that while a rise in those prices of 0.8 per cent in the space of one year appeared to signal prices pulling higher again, this was misleading because the comparison was made with December 2008, when fuel prices had slumped sharply.
