| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | -0.1% | -0.3% to 0.2% | 0.1% | 0.0% |
| Year over Year | 2.0% | 1.8% to 2.3% | 2.1% | 1.8% |
| HICP - M/M | -0.2% | -0.4% to -0.1% | -0.1% | 0.2% |
| HICP - Y/Y | 2.1% | 1.8% to 2.1% | 2.1% | 2.0% |
Highlights
Germany's inflation for January 2026 suggests growing price stability, with the consumer price index rising by 2.1 percent year-over-year. This places inflation close to the European Central Bank's medium-term target, signalling a gradual easing of price pressures after prolonged volatility. Monthly movements remain modest, as prices increased by only 0.1 percent compared with December 2025, indicating limited short-term inflation momentum.
The harmonised index of consumer prices confirms this trend, recording the same annual increase of 2.1 percent, while showing a slight monthly decline of 0.1 percent. This divergence suggests that temporary factors may be dampening short-term inflation dynamics.
However, underlying pressures persist. Core inflation, which excludes food and energy, remains elevated at 2.5 percent, highlighting the continued influence of services and wage-related costs. This implies that although headline inflation is stabilising, domestic price formation has not fully normalised.
In summary, the latest data point to a cautiously improving inflation environment. While headline inflation appears under control, the persistence of core inflation may limit the scope for rapid monetary easing, reinforcing the need for a balanced policy approach that supports growth without reigniting price pressures. These updates take the RPI to 21 and the RPI-P to 18, meaning that economic activities are now outperforming market expectations in Germany.
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.