German Inflation Surges in March as Energy Prices Rebound

Germany’s inflation rate climbed to 2.7% year-over-year in March 2026, up from 1.9% in February and matching market forecasts, according to a preliminary estimate. This marks the highest level since January 2024, driven by a 7.2% spike in energy prices, the first yearly increase since December 2023, amid the ongoing Middle East conflict. Services inflation held steady at 3.2%, while core inflation, which excludes food and energy, remained at 2.5%, and food inflation eased to 0.9% from 1.1%. The harmonized CPI, closely watched by the ECB, also rose to a 14-month high of 2.8%, keeping both measures above the ECB’s 2% target.

Germany’s annual inflation rate eased to 1.9% in February 2026 from 2.1% in January, confirming preliminary estimates. The slowdown was mainly driven by lower energy prices, which fell 1.9%, including declines in natural gas (-4.4%), electricity (-4.1%), district heating (-1.0%), and heating oil (-4.7%). Food price growth also moderated to 1.1% from 2.1%, as steep drops in edible fats and oils (-19.7%), potatoes (-18.1%), and dairy products (-4.9%) offset increases in confectionery (+8.1%) and meat products (+4.5%). Goods inflation also cooled to 0.8% from 1%, while services inflation remained unchanged at 3.2%. Meanwhile, core inflation, which excludes food and energy, held steady at 2.5%. On a monthly basis, the CPI increased 0.2%, following a 0.1% rise in January, supported by higher costs for energy, food, administrative fees, and package holidays. Meanwhile, the EU-harmonised CPI rose 2.0% year-on-year and 0.4% month-on-month, both matching initial estimates.

Germany’s annual inflation rate eased to 1.9% in February 2026 from 2.1% in January, coming in slightly below market expectations of 2.0%, according to preliminary estimates. The harmonized index of consumer prices, closely monitored by the ECB, also edged down to 2.0% from 2.1%, leaving both measures broadly aligned with the central bank’s 2% target. Goods inflation slowed to 0.8% from 1.0%, as energy prices declined at a faster pace (-1.9% vs. -1.7%) and food inflation cooled markedly to 1.1% from 2.1%. Services inflation held steady at 3.2%, while core inflation, which excludes food and energy, remained unchanged at 2.5%.