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Germany Inflation April 2024

Germany: Harmonized inflation increases in April

Harmonized inflation ticked up to 2.4% in April, slightly above March’s 2.3% but matching market expectations and the Euro average average. The increase was broad-based, with faster price pressures recorded for food and non-alcoholic beverages, and housing and utilities.

That said, the trend pointed down, with annual average harmonized inflation falling to 4.1% in April (March: 4.6%). Meanwhile, consumer price inflation was unchanged, coming in at March’s 2.2% in April.

Lastly, harmonized consumer prices increased 0.63% in April over the previous month, mirroring March’s reading. April’s result marked the joint-weakest reading since January.

Inflation is forecast to average around current levels this year as a whole, more than halving from 2023 levels. The delayed impact of past interest rate hikes, a high base of comparison and still-muted economic activity will keep price pressures in check. According to our Consensus, inflation may return to the ECB’s 2.0% target as soon as in Q3.

EIU analysts commented:

“Annual inflation will remain above the ECB’s 2% target for most of the year, largely owing to base effects. Real wage growth is starting to turn positive, and, as interest rates start to fall from mid-year, we expect a gradual firming of economic activity, resulting in a shift from mostly supply-side to demand-side inflationary pressures thereafter.”

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