On February 20, 2025, we will shop and walk along the shopping streets in the city centre of Bavaria, Germany.
Michael Nuguen | nuphoto | Getty Images
Germany’s annual inflation took place at 2.8%, which has not changed in February but is higher than expected, according to preliminary data presented by statistical agency Destatis on Friday.
The printing is harmonious throughout the Euro area for comparability.
The February printing will be compared to an estimate of 2.7% from economists surveyed by Reuters. The harmonized annual inflation measurements for January were also included at 2.8%, but this has already been unchanged since December.
Preliminary Destatis data shows that harmonious inflation rose 0.6% each month.
The so-called core inflation, which removes food and energy costs, fell 2.6% from a 2.9% read in January.
Deutsche Bank research economist Sebastian Becker said on Friday that lower core inflation readings were positive, saying printing is expected to continue to decline as wage growth is eased and the wider economy is held back.
The closely monitored service inflation print has also been eased, reaching 4% the previous month, before reaching 3.8% in February.
According to CNBC’s translation, Becker said the decline was smaller than expected, so Friday’s data reads for the service were “a bitter drop.”
Germany’s inflation fell below the 2% European Central Bank target last September, but has since accelerated again, and has now surpassed the key mark for five consecutive months.
Germany’s data is ahead of Monday’s Eurozone consumer price index printing and the latest ECB decision later next week. The central bank in January cut interest rates for the fifth time since it began easing monetary policy last summer, with the market being widely priced on another trim on Thursday.
Inflation data from Germany and other eurozone countries could cut 25 bases from the ECB next week, ING’s global head of macros, Karsten Bruzesky said on Friday.
“But the main question is next to the ECB,” he said, noting that some members of policymakers have begun to resist further interest rate cuts. All eyes are based on the language of the statement after the release. In particular, Bruzesky explained whether the ECB would choose to drop or adjust “restrictive” labels from its monetary policy explanation.
Friday’s figures were also part of the first important economic data points to be released since last weekend’s German election, with the conservative alliance between the Christian Democratic Union and the Christian Social Union securing the biggest vote.
This will allow lead candidate Friedrich Merz to take over Olaf Scholz as prime minister, but it appears that CDU-CSU will likely form a governing coalition with Scholz’s Social Democrats.
Economics is a hot topic during the campaign, and Meltz suggests that his policy plans will boost the country’s economy, including income and corporate tax cuts, reduced bureaucracy, changes in social interests, and deregulation. Germany’s Gross Domestic Product has long hovered through the recession territory, shrinking by 0.2% after adjusting prices, seasons and calendars for the last quarter of 2024.
