Germany's consumer price inflation was confirmed at 2.1% in April 2025, the lowest level since October 2024 and marking the second consecutive month of easing price pressures, as energy-driven disinflation continued to weigh on overall readings.
Germany inflation eases to 2.1% in April
The latest figures provided further evidence that the sharp price spikes seen in early 2024 are gradually unwinding, although pockets of persistent inflation remain, particularly in services.
Inflation in goods decelerated significantly to 0.5% in April from 1.0% in March, primarily driven by a steep drop in energy prices, which fell by 5.4% compared to a 2.8% decline previously. The downturn was mainly attributed to lower prices for motor fuels, solid fuels, and heating oil, reflecting both softer global commodity prices and reduced seasonal demand following an unusually mild spring. Additionally, food inflation continued its gradual slowdown, rising by 2.8% compared to 3.0% in the prior month, as improved harvests and more stable global supply chains helped ease upward pressures on key food items.
However, offsetting some of the disinflationary trends was a noticeable acceleration in services inflation, which rose to a three-month high of 3.9% from 3.5% in March. The increase was largely underpinned by higher prices for travel-related services, leisure activities, and housing-related services, with rising labor costs feeding into the broader services sector amid a still-tight labor market. As a result, core inflation—which excludes the often volatile food and energy components—rose to 2.9% in April from 2.6% in March, bouncing off a more than three-year low and signaling that underlying price pressures remain relatively sticky, particularly in labor-intensive sectors.
Monthly data
On a monthly basis, consumer prices increased by 0.4%, following a 0.3% gain in March, reflecting seasonal factors, including the rise in travel and hospitality services ahead of the holiday season. The EU-harmonised index of consumer prices (HICP), which allows for comparison across the euro area, rose by 2.2% year-over-year, slightly easing from the 2.3% pace in March. On a monthly basis, harmonised consumer prices increased by 0.5%, a modest uptick from a 0.4% gain previously.
Looking ahead, economists expect German inflation to remain on a moderating path throughout the second half of 2025, aided by further easing in energy prices and fading base effects. Nevertheless, services inflation and core price pressures are likely to remain elevated due to robust wage growth and resilient demand in the services sector, posing a potential challenge to the European Central Bank’s (ECB) efforts to anchor inflation sustainably back to its 2% target. The mixed inflation signals also complicate the ECB's next policy steps, as markets remain divided on whether recent rate cuts will be followed by additional easing or a cautious pause to monitor the evolution of core inflation dynamics.
