German inflation could ease on low cost ticket

BERLIN Reuters -- German inflation could cool in the coming months as a result of a low-cost public transport ticket agreed by political leaders, with one point pointing to the power of government measures to ease price pressures.

ING chief economist Carsten Brzeski said that the 49 euro $51.73 monthly ticket would be a renewed brake on inflation, inspired by an even cheaper but temporary scheme from the government's first relief package in response to the energy crisis.

He expects the inflation rate to be one percentage point lower than usual in the first quarter of 2023 due to the so-called Deutschlandticket and a cap on gas prices set to kick in for households and businesses.

With this, we will also reach peak inflation in December, according to Brzeski, who said that the 49 euro ticket is proof that it is currently governments, not theECB, that can push inflation down quickly. Inflation in Europe's largest economy reached its highest level in decades in October at 11.6% before easing to 11.3% in November.

Commerzbank chief economist Joerg Kraemer said he expects the Germanyticket, which is valid for public transport and regional trains nationwide, to curb inflation by 0.3 percentage points.

Chancellor Olaf Scholz announced late Thursday that the country's 16 state leaders will be negotiating with the country's representatives in the first quarter of 2023, without a date for the introduction of the Deutschlandticket.