- Prior +2.3%
- HICP +2.0% vs +2.0% y/y prelim
- Prior +2.6%
In terms of headline annual inflation, the December reading is the lowest for the year and the softest reading since September 2024. However, consumer prices in Germany rose by an average of 2.2% in 2025. And that matches up to the 2024 average reading, which was also 2.2%. Destatis notes though that at least this signals that “consumer price trends have stabilised since the previous years it was significantly above 2%”.
As for core annual inflation, that is seen at 2.8% for the whole of 2025. It’s some good news for Germany as the trend continues to move lower but the pace of decline still leaves a lot to be desired. For some context, this was 5.1% in 2023 and 3.0% in 2024. So, the marginal decline in 2025 is nothing all too positive as core prices look to be more stubborn.
That especially since it continues to hold well above the key 2% threshold, one that the ECB continues to look out for in Europe’s largest economy.
Looking at the breakdown, services inflation remains sticky at 3.5% for the year. This compares to the 4.4% estimate in 2023 and 3.8% estimate in 2024. Once again, this is well above the desired 2% mark. Of note, combined passenger transport (+11.4%), social services (+8.7%), and insurance (+7.4%) became noticeably more expensive for consumers on average.
Meanwhile, prices for many other services, such as inpatient healthcare (+6.7%), vehicle maintenance and repair (+5.5%), package holidays (+4.6%), and restaurant services (+4.0%), also increased significantly from 2024 to 2025.
So, this is one spot that is going to be heavily scrutinised in 2026 as well.
Besides that, prices for goods increased by 1.0% in 2025, including food prices by 0.8%. So, at least this is one spot that’s doing “better” on the inflation front.
