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In Munich, Bavaria, Upper Bavaria, Germany, December 28, 2024. shoppers stroll the shopping streets during the festive season, taking advantage of the stores’ post-Christmas sales.
Michael Nguyen | Nurphoto | Getty Images
Inflation in Germany jumped to a higher-than-expected 2.9% in December, Germany’s statistics office Destatis said in its first reading since the country’s government was dissolved late last month.
The country’s preliminary consumer price index printed on Monday is harmonized across the euro area for comparability. That compares with the 2.6% forecast by analysts polled by Reuters.
The harmonized index of consumer prices rose by 0.7% on a monthly basis, according to Destatis.
December marked the third consecutive month in which German inflation returned above the European Central Bank’s 2% target. Indicator fell to 1.8% in Septemberthen returned to 2.4% in October and was unchanged at this level in November.
So-called core inflation, which excludes food and energy costs, rose to 3.1% in December from 3% the previous month. Inflation in the services sector also pushed growth to 4.1%, compared with 4% in November, the statistics office said.
Carsten Brzeski, ING’s global head of macro, said on Monday that the data showed “that the summer celebrations of successfully defeating the inflation monster were premature”.
The less favorable effects of the energy base were probably a key factor in the re-acceleration of inflation in Germany, he noted.
“Looking ahead, it appears that inflation will continue to be too high as the favorable effects of the energy base continue to fade and wages rise,” Brzeski said.
The latest data comes amid a period of political uncertainty in Germany and is one of the last key economic readings ahead of federal elections, which will be held earlier than originally planned on February 23.
Now the former ruling coalition of Germany broke up in Novemberwhen Chancellor Olaf Scholz dismissed former Finance Minister Christian Lindner and announced early elections.
Since then, the country has taken a number of constitutionally mandated steps to pave the way for elections, including a vote that expressed a loss of confidence in Scholz and the official dissolution of the lower house of the German parliament President Frank-Walter Steinmeier.
