Germany: Inflation eases in February from the prior month
Latest reading: Harmonized consumer prices rose 1.9% in annual terms in February, following a 2.1% increase in the prior month. February’s reading fell short of market expectations and was the joint-weakest since September 2024.
Relative to the previous month’s figures, there were milder price pressures for food and non-alcoholic beverages (+1.9% in annual terms vs +2.9% in January), housing and utilities (+0.5% vs +0.6% in January) and recreation (+2.1% vs +2.3% in January). In contrast, price pressures were higher for transportation in February (+2.2% vs +2.0% in January). Finally, the change in restaurant and hotel prices was the same as in the prior month (+3.2% in February and January).
Meanwhile, consumer prices rose 1.9% in February, following a 2.1% increase in the prior month.
Finally, harmonized consumer prices were up 0.38% in February in month-on-month terms, following a 0.11% decline in the previous month.
Panelist insight: Commenting on the outlook, Holger Schmieding, chief economist at Berenberg, stated:
“Higher government spending [due to the fiscal stimulus] will also put upward pressure on prices. The new government needs to implement pro-growth supply-side reforms to raise trend growth and limit inflation. Cuts to corporate taxes, a pruning of welfare benefits and a more rational energy policy would make faster sustained growth possible. […] An extended Gulf conflict would push up inflation sharply and undermine the strengthening of private consumption and investment in our forecast this year.”