| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.0% | 0.0% to 0.0% | 0.0% | 0.0% |
| Year over Year | 1.8% | 1.8% to 1.8% | 1.8% | 1.8% |
| HICP - M/M | 0.2% | 0.2% to 0.2% | 0.2% | 0.2% |
| HICP - Y/Y | 2.0% | 2.0% to 2.0% | 2.0% | 2.0% |
Highlights
Germany's inflation data show that headline inflation stood at 1.8 percent in December on a year-over-year basis, while prices were unchanged compared with the previous month (0.0 percent). Furthermore, inflation averaged 2.2 percent over the year, unchanged from 2024 and sharply below the peaks of 20222023, signalling that the post-energy-shock inflation cycle has largely stabilised. This easing became more visible at year-end, with inflation slowing to 1.8 percent in December, the first sub-2 percent reading in 2025, helped mainly by falling energy prices.
However, underlying pressures remain evident. Core inflation, at 2.8 percent in 2025, stayed well above headline inflation, reflecting persistent price increases outside food and energy. Services were the main driver, rising by 3.5 percent on average, with particularly strong increases in transport, health, social services and insurance. This pattern suggests that wage growth and domestic cost dynamics, rather than imported energy shocks, are now the dominant inflation forces.
Goods inflation was comparatively subdued at 1.0 percent, dampened by declining energy prices and mixed food price movements. While staples such as butter and oils became cheaper, sharp increases in confectionery and meat illustrate continued volatility within food markets.
Indeed, the latest update suggests an economy transitioning from crisis-driven inflation to a more structurally embedded, service-led price environment, posing a different challenge for monetary policy in 2026. These updates take the RPI to minus 12 and the RPI-P to 3, meaning that economic activities are now within the expectations of the German economy.
Market Consensus Before Announcement
Forecasters see no revision in the final report for December from the flash at 0.0 percent and 1.8 percent on year.
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.