Key facts
- German inflation rose to 2.9% in August, confirming preliminary data.
- The August inflation rate was below the 3.0% consensus forecast.
- Harmonized consumer prices were 2.9% year-on-year in August, up from 2.8% in July.
- Energy inflation accelerated to 10.5% in August from 8.3% in July.
- Services inflation eased to 2.8% from 2.9%, and food inflation slowed to 0.1% from 0.4%.
- Core inflation, excluding energy and food, held flat at 2.4% for a second consecutive month.
German inflation accelerated to 2.9% in August, confirming preliminary data from the federal statistics office. This figure, harmonized to compare with other European Union countries, was below the 3.0% consensus forecast and marked the highest level since April. The increase was primarily driven by energy inflation, which surged to 10.5% in August from 8.3% in July, a ramp directly traceable to tensions between the US and Iran and elevated crude oil prices. However, inflation in other categories remained subdued. Services inflation eased to 2.8% from 2.9%, food inflation slowed to 0.1% from 0.4%, and core inflation, excluding energy and food, held steady at 2.4% for the second consecutive month. The German government projects full-year inflation at 2.7% for 2026 and 2.8% in 2027. Despite the miss below 3%, European Central Bank policymakers were reportedly aligned on raising rates at their September 10 meeting, with the Iran conflict cited as a primary rationale. ECB Executive Board member Isabel Schnabel indicated that further tightening would be necessary as inflation is unlikely to return to target over the medium term at the current policy rate.