Germany’s Inflation Rate Declines in January

Germany’s annual inflation rate slowed to 2.3% in January 2025, down from 2.6% in December, according to the Federal Statistical Office. The decrease matched preliminary estimates and reflected easing price pressures across key sectors, particularly in food and services.

Key Inflation Trends

• Food inflation fell sharply to 0.8% from 2.0% in December.
• Services inflation eased slightly to 4.0% from 4.1%.
• Goods inflation moderated to 0.9% from 1.4%.
• Energy prices declined 1.6%, with household energy down 2.5% and motor fuel prices dipping 0.1%.
• Electricity prices dropped 3.6%, contributing to overall lower energy costs.

Core Inflation and EU-Harmonised CPI

• Core inflation (excluding food and energy) fell to 2.9%, marking its lowest level in three months.
• On a monthly basis, consumer prices declined 0.2%, reversing a 0.5% rise in December.
• The EU-harmonised CPI remained at 2.8% year-on-year but fell 0.2% month-on-month after a 0.7% increase in December.

Outlook

The continued decline in food, energy, and core inflation suggests easing cost pressures in Germany, aligning with broader eurozone inflation trends. However, with services prices still elevated, policymakers will closely monitor price developments to assess potential monetary policy adjustments in the coming months.

Source: Federal Statistical Office