Germany's inflation edged up to 2.4 percent in September 2025, marking the second consecutive monthly rise after a period of cooling earlier in the year. The uptick reflects stubborn price pressures in services, which surged 3.4 percent year-over-year, driven by higher costs in transport, healthcare, and insurance. Meanwhile, energy prices fell only slightly (minus 0.7 percent), showing a marked slowdown in their decline and signalling that their disinflationary effect is fading. Motor fuel and heating oil even recorded modest increases, reversing earlier downward trends.

Food inflation eased to 2.1 percent, falling below the overall inflation rate for the first time in 2025. Price rises were uneven as chocolate (21.2 percent) and fruit (5.1 percent) became notably costlier, olive oil (minus 22.6 percent) and vegetables (minus 2.1 percent) became cheaper. Core inflation, which excludes food and energy, rose slightly to 2.8 percent, confirming persistent underlying price pressures beyond volatile categories.

Month-over-month, prices climbed 0.2 percent, with goods (0.4 percent) driving the increase. The data suggest that although inflation has moderated since its 2023 highs, it remains sticky, particularly in the services sector. These latest updates take the RPI to 0 and the RPI-P to minus 4, meaning that economic activities continue to perform within the expectations of the German economy.

The consensus looks for no revision from increases of 0.2 percent and 2.4 percent in the flash.

The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. A provisional estimate, with limited detail, is released about two weeks before the final data are reported.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Germany where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, Germany's interest rates are set by the European Central Bank.

Germany like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The preliminary release is based on key state numbers which are released prior to the national estimate. The states include North Rhine-Westphalia, Baden-Wuerttemberg, Saxony, Hesse, Bavaria and Brandenburg. The preliminary estimate of the CPI follows in the same day after the last of the state releases. The data are revised about two weeks after preliminary release.

Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.