Pedestrians traverse a walking area in the Bavarian capital.
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In October, Germany’s inflation rate climbed to 2.4%, once again surpassing the 2% goal set by the European Central Bank. This development comes as the country narrowly avoided a technical recession during the third quarter.
The preliminary data shared by Germany’s statistical agency, Destatis, allows for straightforward comparisons across the eurozone.
Analysts surveyed by Reuters had predicted a harmonized inflation rate of 2.1% for October.
Following a peak at 2% in August, harmonized inflation dipped to 1.8% in September.
October’s core inflation rate, which excludes the more fluctuating prices of food and energy, reached 2.9%, an increase from 2.7% in September, according to the latest report from Germany’s Statistics Office.
Additionally, the inflation rate for services rose to 4% in October, climbing from 3.8% the previous month.
In a translated note provided to CNBC, Deutsche Bank economist Sebastian Becker expressed that the latest increase in core inflation reflects ongoing troubles with price growth and that more time is needed for stabilization.
“Short-term indicators suggest rising inflation,” he stated, emphasizing that only base effects could be causing inflationary pressures. However, the current sluggishness in the labor market indicates that core inflation numbers may decrease gradually over the coming year.
According to Germany’s Federal Labor Office, the seasonally adjusted unemployment figures increased more than anticipated in October, as reported by Reuters.
Meanwhile, ING’s global head of macro, Carsten Brzeski, anticipates additional inflation increases in the final two months of this year, with projections of a sustained rate between 2% and 3% for the entirety of next year.
“Persistent inflation levels are likely, especially as wages go up and the positive effects stemming from energy costs begin to diminish,” he noted.
The inflation statistics follow the earlier release by Destatis of Germany’s preliminary gross domestic product (GDP) figures for the third quarter, which exhibited a 0.2% growth compared to the previous quarter. This figure took analysts by surprise, as they expected a 0.1% contraction, allowing Germany to narrowly sidestep a technical recession defined by two consecutive quarters of economic decline.
Destatis also revised the GDP data for the second quarter down to a 0.3% contraction, from the previously reported 0.1% decline.
Consumer price data for the entire eurozone is scheduled to be released tomorrow.
