Berlin, May 19, 2025: Apricots are sold on green glowers for 7.98 euros per kilogram. Grapes and papaya are also served.
Photographed by the Alliance of Photographs by Jens Carreen/Getty Images
Germany’s annual inflation rate approaches the European Central Bank’s 2% target in May, but is slightly higher than analyst estimates, preliminary data from the Bureau of Statistics showed on Friday.
The printing is compared to the 2.2% reading in April and the 2% forecast from Reuters.
The printing is harmonious throughout the Eurozone for comparability.
The so-called core inflation removed more volatile food and energy prices, slightly soaking at 2.9% from 2.8% in April in May. Meanwhile, the carefully viewed service printing was rapidly eased, with 3.4% compared to 3.9% of the previous month.
Energy prices have fallen sharply for the second consecutive month, falling 4.6% in May.
Germany’s consumer price index has been locked into the European Central Bank’s 2% target over the last few months, with a positive signal amid continuing uncertainty about the economic outlook for Europe’s biggest economy.
This goal should be met in the coming months, ING’s global head of macros Karsten Bruzeski said in a memo on Friday.
“At least in the near future, Germany’s inflation is likely to continue its downward trend, likely falling to less than 2% in the coming months,” he said.
Opposing developments are expected to shape the outlook for inflation, paired with lower energy prices, Bruzesky noted that prints will hover around the 2% mark throughout the second half of the year.
“On the other hand, labour market cooling should take away wage pressure and, as a result, inflationary pressure. On the other hand, government fiscal stimulus packages are likely to boost inflation pressures at the end of the year and beyond,” he explained.
Domestic and global issues plague Germany’s expectations for a financial future.
On the one hand, US President Donald Trump’s tariffs could undermine economic growth, given Germany’s status as an export-dependent country, although the potential impact of such a duty on inflation remains unknown. However, frequent policy changes and developments have left the photographs muddy.
Meanwhile, Germany’s newly created government is now working, making the economy a top priority. Questions remain about when and how well the new Berlin administration’s policy plan will be realized.
According to LSEG data, the ECB is scheduled to make its next interest rate decision on June 5th, with traders pricing at 96% or more with a quarter-point chance of a rate cut. In April, the central bank reduced deposit facility fees by 25 basis points to 2.25%.
ING’s Brzeski said the German inflation print on Friday should bring “relief” to the ECB. This suggests that excavations are ongoing, and he added that despite the latest developments on tariffs, the central bank has a stronger case than the hold.
After the data was released, German chest wall yields were slightly higher. The two-year residue rose to 1.719% on one basis, while the yield for the 10-year band was less than one basis point per 2.521%.
