Germany’s Inflation rate rose for the third consecutive month, reaching 2.6% in December 2024, up from 2.2% in November and surpassing market expectations of 2.4%, according to preliminary estimates. This marks the highest inflation rate in nearly a year, driven by faster price increases in key sectors such as services and food, alongside a softer decline in energy prices.

Sectoral Price Dynamics

Service prices accelerated to 4.1% from 4% in November, while food prices increased to 2% from 1.8%. Energy prices, although still declining, fell at a slower pace of 1.7%, compared to a sharper 3.7% drop the previous month. On a monthly basis, the Consumer Price Index (CPI) rose by 0.4%, recovering from November’s 0.2% decrease and exceeding forecasts of 0.3%.

Core Inflation and EU-Harmonised CPI

Excluding volatile components such as food and energy, core inflation edged up to 3.1% from 3%, signaling persistent underlying price pressures. Additionally, the EU-harmonised CPI, a key measure for cross-country comparisons within the Eurozone, rose by 2.9% year-on-year and 0.7% month-on-month, both figures coming in above expectations of 2.6% and 0.5%, respectively.

Read More: Germany ZEW Economic Sentiment Index

2024 Inflation Overview

For the entire year of 2024, Germany’s annual average inflation rate is estimated to be 2.2%, highlighting a moderate yet consistent rise in consumer prices. This upward trend underscores the challenges policymakers face in balancing economic growth with inflationary pressures as Germany navigates a shifting economic landscape.