Germany’s Inflation Exceeds Expectations 

Germany’s Inflation Signals Trends for Eurozone 

Germany’s yearly inflation rate rose too high in December which was observed to inflate greater than expected due to the increase in food prices and a smaller decline in energy cost than the previous month. According to the data reported by the Federal Statistics Office on Monday, the harmonized annual consumer price inflation rate increased to be 2.9% which was higher than the prediction of analysts which was a 2.6%. German’s economy is doing better than before owing to the factor that the inflation rate was 2.4% in the month of November. 

(Germany Inflation m/m Chart, Source: Federal Statistical Office Germany) 

Economists are closely watching German Inflation figures because they are published a day before Eurozone inflation data gets published. The most recent inflation data will be the deciding factor before the ECB holds its meeting on January 30. There is a prediction that Eurozone economies would face inflation rate to go up to 2.4% in comparison to 2.2% in the November month. However, the current rise in inflation shall not be a concern for the Eurozone Economies as it is projected that Europe would ease inflationary pressures by 2025. 

According to projections made by the Federal Statistics Office, it is predicted that Germany’s annual average inflation rate will amount to 2.2% as of 2024, which is a stark decrease from 5.9 % during the year 2023. December saw a slow increase in Core inflation rate to 3.1 %, from the figure of 3.0 % recorded in November. Even though the cost for energy has reduced by 1.7% when measured year over year, food prices rose by 2.0% in the same period. Inflation in the services sector increased slightly to 4.1% in December, up from 4.0% in the preceding two months. 

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