Germany’s Inflation Eases to 2.6% in May

Germany’s annual inflation rate rose 2.6% in May 2026, easing from a two-year high of 2.9% in the previous month and confirming preliminary estimates. Price growth moderated across several categories, including food and non-alcoholic beverages (0.7% vs. 1.5% in April), alcoholic beverages and tobacco (3.8% vs. 4.3%), housing and utilities (1.4% vs. 1.6%), and restaurants and hotels (2.7% vs. 3.4%). In contrast, energy prices remained elevated, rising 6.6% amid the US-Iran war, although the increase eased from 10.1% in the previous month due to the temporary reduction of the energy tax on gasoline and diesel. Additionally, inflation accelerated in health (2.3% vs. 2.0%) and recreation and culture (2.1% vs. 1.1%). On a monthly basis, consumer prices fell 0.2% in May, following a 0.6% increase in the previous month, in line with preliminary estimates. Meanwhile, the annual HICP edged down to 2.7% from 2.9% in April, remaining well above the European Central Bank’s 2% target.

Germany’s consumer price inflation slowed to 2.6% year-over-year in May 2026, down from an over two-year high of 2.9% in April and slightly below market expectations, according to preliminary data. Despite the decline, inflation remains above the ECB’s 2% target. Goods inflation fell to 2.2% from 2.9%, driven by easing energy (6.6% vs. 10.1%) and food (0.4% vs. 1.2%) price pressures. However, services inflation accelerated to 3.1%, rebounding from a three-and-a-half-year low of 2.8% in April. Core inflation, excluding food and energy, rose to 2.5%, up from a five-year low. Meanwhile, the EU-harmonized annual inflation rate also eased to 2.7% from 2.9%.

Germany’s annual inflation rate accelerated to 2.9% in April 2026, confirming preliminary estimates and rising from 2.7% in March, marking the highest reading since January 2024. The increase was largely driven by another sharp rise in energy prices, which surged 10.1% amid higher crude oil prices linked to the ongoing Iran war. Motor fuel costs jumped 26.2%, while heating oil prices soared 55.1%. Food inflation also picked up to 1.2% from 0.9%, while goods inflation accelerated to 2.9% from 2.3%. In contrast, services inflation eased to 2.8% from 3.2%. Core inflation, which excludes food and energy, held steady at 2.3%. On a monthly basis, consumer prices rose 0.6% in April, matching preliminary estimates, as energy prices increased 2.1%. Meanwhile, the annual HICP inflation rate edged up to 2.9% from 2.8% in March, also reaching its highest level since January 2024, and well above the European Central Bank’s 2% target.