Germany Inflation Slips Below ECB Target

2026-01-06 13:09 By Joana Ferreira 1 min. read

Germany’s annual inflation rate fell to 1.8% in December 2025, down from 2.3% in November and below market expectations of 2.0%, according to preliminary data.

The reading dropped below the European Central Bank’s 2% target midpoint for the first time since September 2024, marking the second-lowest inflation rate since early 2021.

Goods inflation slowed sharply, easing to 0.4% from 1.1% in November, reflecting softer food price growth (0.8% vs. 1.2%) and a deeper decline in energy prices (-1.3% vs. -0.1%).

In contrast, services inflation remained stubbornly elevated and unchanged at 3.5%.

Core inflation, which excludes volatile food and energy prices, fell to 2.4%, its lowest level since June 2021.

Meanwhile, the EU-harmonized CPI eased to 2.0% in December, its lowest level since July and below forecasts of 2.2%.

For the full year 2025, national inflation averaged 2.2%, while harmonized inflation averaged 2.3%.



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