Annual inflation in Germany accelerated to 2.1% in January from 1.8% in December, an increase of 0.1 percentage point month‑on‑month. The print exceeded Trading Economics’ forecast of 2.0%. Inflation has shown notable volatility over the winter, as in November, it stood at 2.3%.
Core inflation, which excludes food and energy, was estimated at 2.5%, up from 2.4% in December. The main driver of the acceleration was a sharp rise in food prices. Food inflation rose 2.1% in January, after a 0.8% increase in December, notching a marked pickup that may reflect seasonal effects or more structural shifts in supply chains and production.
The rise in inflation comes as Germany faces deterioration in the labor market. Data released on January 30 showed unemployment at its highest level in 12 years, a development Chancellor Friedrich Merz called an alarming signal. The combination of accelerating inflation and rising unemployment creates a difficult macroeconomic backdrop for Europe’s largest economy, constraining policymakers’ room to support jobs without risking further inflationary pressure.
