German Inflation Jumps to 2.9% in December
German inflation has jumped to 2.9% in December, exceeding market forecasts and highlighting the country’s struggles to control prices. According to the country’s statistics office, Destatis, the preliminary reading of the harmonized consumer price index shows a 2.9% year-on-year increase, with core inflation edging higher to 3.1% and services inflation coming in at 4.1%.
The figure is higher than the 2.6% forecast from analysts and marks the third consecutive month that German inflation has been above the European Central Bank’s 2% target. The jump is attributed to less favorable energy base effects, which are likely to continue to impact the country’s inflation rates in the coming months.
Carsten Brzeski, global head of macro at ING, stated that the data suggests that Germany’s inflation struggle is not yet over, with favorable energy base effects continuing to wane and wages increasing. The latest reading comes as Germany faces political uncertainty following the dissolution of its government in November, and as the country prepares for federal elections earlier than originally scheduled on February 23.