The annual consumer price inflation in Germany fell to 8.6% in December 2022, from 10% reported in November and below the market consensus of 9.1%, a preliminary estimate showed. It was the lowest rate since August as a government’s initiative to lower household natural gas bills came into effect. Berlin announced a federal one-off payment in December to cover the monthly instalment for gas and heat for all households and small- to medium-sized businesses. Goods inflation slowed sharply to 13.9% (vs 17.1% in November) due to smaller increases in costs for both energy (24.4% vs 38.7%) and food (20.7% vs 21.1%). On the other hand, services inflation accelerated to 3.9% (vs 3.6% in November), with rent prices advancing 1.9%, the same pace as in November. Still, inflation remained well above the European Central Bank’s target of about 2%. On a monthly basis, consumer prices dropped 0.8% in December, much more than an expected 0.3% decline.