Shoppers stroll along shopping streets and take advantage of stores’ post-Christmas sales during the festive season in Munich, Upper Bavaria, Germany, December 28, 2024.
Michael Nguyen | Noor Photos | Getty Images
German statistics office Destatis said in its first reading since the dissolution of the German government at the end of last month that Germany’s inflation rate jumped to a higher-than-expected 2.9% in December.
The preliminary euro zone consumer price index published on Monday was harmonized across the euro zone to achieve comparability. That compared with 2.6% forecast by analysts polled by Reuters.
Destatis said the unified consumer price index rose 0.7% quarter-to-quarter.
December was the third consecutive month that German inflation returned to above the European Central Bank’s 2% target. The indicator fell to 1.8% in September before recovering to 2.4% in October and remaining flat in November.
So-called core inflation, which excludes food and energy costs, rose to 3.1% in December from 3% the previous month. Services sector inflation also rose, rising to 4.1% from 4% in November, according to the Bureau of Statistics.
Carsten Brzeski, ING’s global head of macro, said on Monday the data showed “it would be premature to celebrate the success of the summer in defeating the inflation monster.”
He noted that a less favorable energy base effect could be a key driver of a reacceleration of inflation in Germany.
“Looking ahead, slightly higher levels of inflation stickiness appear to be here to stay as the favorable energy base effect continues to weaken while wages increase,” Brzeski said.
The latest data comes amid political uncertainty in Germany and is one of the last key economic data before federal elections scheduled for February 23.
Germany’s current ruling coalition collapsed in November when Chancellor Olaf Scholz fired former Finance Minister Christian Lindner and announced he would call early elections.
The country has since been taking a series of constitutional steps to clear the way for the polls, including a vote expressing a loss of confidence in Scholz and President Frank-Walter Steinmeier formally dissolving the lower house of Germany’s parliament.
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