Sakari Suoninen

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Beer washes out German inflation angst

September 17, 2013

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Germans, many say, have inflation angst in their DNA. But there is one exception to that. Beer.

Although prices at Oktoberfest have been inflation-beating for years, consumption keeps rising. Average price of the 1-liter (35 oz) stein of beer will be 9.66 euros ($ 12.85), up 3.6 percent from last year’s festivities, compared with German overall annual inflation of 1.5 percent.

Since 1985, the Wiesn Visitor Price Index has risen more than twice as fast as the country’s overall inflation rate, Unicredit calculations show. But this has failed to stem the tide of more beer flowing down visitors’ throats, with millions and millions of litres to be consumed again this year.

Unicredit’s research note also pointed out that the European Central Bank’s low-rate policy could play a role in boosting beer consumption, bucking an international trend of declining brew sales in the face of increasing costs.

“The lower interest rates are, the greater – ceteris paribus – is the incentive to purchase beer at this year’s Wiesn compared to the alternative of saving,” Unicredit’s Alexander Koch wrote. Wiesn – short for Theresienwiese – is the field in Munich where the annual fest is held.

Germany – motivated by the fear of falling into a high-inflation spiral – has led the resistance to the ECB taking such measures as buying assets to ease the plight of heavily indebted southern European countries, causing consternation within the 17-country bloc.

Maybe supporters of the ECB doing more should seek for the central bank to hold its Oct. 2 meeting in Munich instead of Paris?

“Entering the Oktoberfest site and drinking a Mass makes Germans less price sensitive and reduces their inflation fears,” Koch said.

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  • About Sakari

    "I am part of the Reuters team covering the European Central Bank. Before moving to Frankfurt in early 2009, I was based in Helsinki, where I wrote about the Finnish economy and paper industry."
    Joined Reuters:
    2006
    Languages:
    Finnish, English, German, Swedish
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