In Germany, as in other countries, the strong attention paid to food prices was certainly also supported by the press coverage of the issue. The overall contribution of food prices to actual inflation, however, is limited by their weight in the overall euro area HICP, which is approximately 12% for processed food and 8% for unprocessed food.
This is one of the reasons why, at times, some discrepancies between the perceived inflation rate and actual inflation may emerge. 1 Of course in our economic analysis, we have to take actual price developments and people’s expectations affecting their spending and savings behaviour into account. Risks to the outlook for price developments remain on the upside.