| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.4% | 0.1% to 0.4% | 0.0% | -0.2% |
| Year over Year | 2.2% | 1.9% to 2.2% | 1.8% | 2.3% |
| HICP - M/M | 0.2% | -0.5% | ||
| HICP - Y/Y | 2.0% | 2.6% |
Highlights
Germany's December 2025 inflation data point to a stabilising price environment as the year draws to a close. Headline inflation is estimated at 1.8 percent year-over-year, comfortably below the annual average of 2.2 percent for 2025, signalling easing price pressures relative to earlier in the year. On a monthly basis, consumer prices were flat, 0.4 percent below the consensus forecasts and suggesting that short-term inflation momentum has largely stalled.
The harmonised index tells a similar, though slightly firmer, story. At 2.0 percent year-over-year and 0.2 percent month-over-month, it indicates modest underlying price increases consistent with broader euro area trends. However, the persistence of core inflation at 2.4 percent highlights that domestic price pressures, particularly in services and non-energy components, remain sticky.
Taken together, the figures suggest that Germany has moved past the peak of its inflation cycle, but has not fully returned to a low-inflation equilibrium. The absence of monthly price growth offers short-term relief to households, yet elevated core inflation implies that the path back to sustained price stability may be gradual rather than immediate. These latest updates take the RPI to minus 33 and the RPI-P to minus 26, meaning that economic activities continue to underperform in Germany.
Market Consensus Before Announcement
The consensus looks for the first reading for CPI for December at up 0.4 percent on the month and up 2.2 percent on year after declining 0.2 percent on the month and rising 2.3 percent on year in November.
Definition
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.
Description
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.