Fuel tax rebate boosts German drivers: Prices fall in May

Fuel prices in Germany saw a notable drop in May, offering relief to drivers after a costly April. This decrease was driven by a combination of a government fuel tax rebate and falling crude oil prices.

Initially, the 17-cent per liter tax cut, implemented in early May to cushion the impact of oil price shocks from the Iran war, was not fully passed on to consumers. However, analyses by the Monopolkommission and the Ifo Institute for Economic Research indicate that the reduction is now being completely reflected at the pump for gasoline types E5 and E10. By late May, prices for these fuels were even slightly below the level expected with the full tax rebate.

The data shows that by the end of May, the tax reduction was almost fully passed on for diesel as well. While gasoline prices saw a decrease of about 13 cents per liter in May compared to April, diesel prices dropped by a more significant 27 cents per liter. This shift meant that diesel became cheaper than Super E10 for the first time since early March.

These lower fuel costs have also helped to dampen overall consumer price inflation. Germany's inflation rate fell to 2.6% in May from 2.9% in April, according to preliminary estimates.