Inflation in Germany
The euro weakened in the mid-2010s, influenced by the European sovereign debt crisis and monetary easing by the European Central Bank. However, it saw periods of strength, particularly as the US Federal Reserve pursued its own easing policies. In late 2022, the euro briefly hit parity with the dollar for the first time in two decades. Overall, over the last decade, the euro lost ground against the dollar, on the back of lower interest rates and weaker economic growth prospects than the U.S.
Harmonized consumer price inflation averaged 2.1% in the ten years to 2022. The 2022 average figure was 8.7%. For more inflation information, visit our dedicated page.
Germany Inflation Chart
Germany Inflation Data
2018 | 2019 | 2020 | 2021 | 2022 | |
---|---|---|---|---|---|
Inflation (HICP, ann. var. %, aop) | 1.9 | 1.4 | 0.4 | 3.2 | 8.7 |
Inflation (HICP, ann. var. %, eop) | 1.7 | 1.5 | -0.7 | 5.7 | 9.6 |
Inflation (PPI, ann. var. %, aop) | 2.6 | 1.1 | -1.0 | 10.5 | 32.9 |
Base effect pushes up inflation in December
Harmonized inflation increased to 3.8% in December, up from November’s 2.3% but slightly lower than the market had been expecting. The acceleration was largely due a low base of comparison created by the one-off state subsidies for energy bills introduced in late 2022. Annual average harmonized inflation fell to 6.0% in December (November: 6.5%). Meanwhile, consumer price inflation rose to 3.7% in December, from the previous month's 3.2%, while core inflation dipped to 3.5% in December, from 3.8% in November. Lastly, harmonized consumer prices increased 0.24% over the previous month in December, contrasting the 0.71% drop seen in November. December's result marked the highest reading since August.
Our panelists expect harmonized inflation to average around Q4 2023 levels in Q1 2024, before declining more sharply in H2 2024 on weak domestic demand and the lagged impact of past ECB rate hikes. That said, inflation is only seen returning to the ECB’s 2.0% target in 2025, with energy prices this year expected to exceed pre-Ukraine war levels. Further commodity-price spikes and wage-price spirals pose upside risks.
ING’s Global Head of Macro, Carsten Brzeski, commented: “The weakening of demand as a result of higher interest rates should lead to actual price drops in the coming months […]. However, on the other hand, the German government’s measures to close the 2024 funding gap in the budget will insert new upward pressure on inflation. The return of the limited VAT [to normal levels…,] the increase in CO2 emission pricing, the introduction of a plastic tax, a flight tax and the end of energy price caps are new inflationary drivers in 2024. As a result, we expect German inflation to hover around 3% YoY in 2024, with risks clearly tilted to the upside.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects German inflation projections for the next ten years from a panel of 37 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable inflation forecast available for German inflation.
Download one of our sample reports to visualize what a Consensus Forecast is and see our German inflation projections.
Want to get access to the full dataset of German inflation forecasts? Send an email to info@focus-economics.com.
Latest Global Inflation News
-
Inflation came in at 1.8% in March, matching February’s reading and surprising markets on the downside. The stable figure was...
-
Australia: Inflation rises in March
Inflation came in at 3.5% in March, up from 3.4% in February. Stronger increases in prices for housing and transport... -
Singapore: Inflation falls to over two-year low in March
Inflation fell to 2.7% in March, down from February’s 3.4%. March’s result represented the lowest inflation rate since September 2021.... -
Bulgaria: Inflation falls to over two-year low in March
Inflation fell to 3.0% in March, down from February’s 3.3%. March’s figure represented the weakest inflation rate since July 2021.... -
Austria: Harmonized inflation rises in March
Harmonized inflation ticked up to 4.1% in March, slightly above February’s 4.0%. Looking at the details of the release, housing... -
Belgium: Harmonized inflation comes in at highest level since March 2023 in March
Harmonized inflation came in at 3.8% in March, which was up from February’s 3.6%. March’s reading represented the highest inflation... -
Italy: Harmonized inflation rises in March
Harmonized inflation increased to 1.2% in March from February’s 0.8%. March’s figure marked the highest inflation rate since October 2023....