Inflation in Germany accelerated more than expected in September to 3.3%, the highest since December 2023, as escalating conflict in the Middle East pushed up energy costs, preliminary data showed Wednesday.
The Federal Statistical Office, known as Destatis, said the annual rate of consumer price inflation rose from 2.8% in July and 2.9% in August. Prices rose 0.6% from the previous month. The European Union-harmonized measure also came in at 3.3% annually and 0.6% monthly. Markets had expected 3% for the harmonized measure and 3.1% for the national one.
Core inflation, which excludes food and energy, held steady at 2.4%. Energy prices were the main driver, rising 14.9% from a year earlier, compared with 8.3% in July and 10.5% in August.
Inflation in Germany remains above the European Central Bank’s 2% target, adding to pressure on the bank. Eurozone inflation was 3.2% in August. The ECB raised its deposit rate by 25 basis points to 2.50% at its Sept. 10 meeting, its second increase this year, as it contends with inflationary pressure from the oil price shock.
German government bond yields rose and prices fell after the data as investors anticipated further ECB rate increases.
Data from other large eurozone economies also pointed to rising prices. Annual inflation reached 5.0% in Spain, 4.1% in Italy and 3.4% in France, the highest in two years. Analysts now forecast eurozone inflation could reach 3.5% to 3.6% in September.
Financial markets expect tight monetary policy and further tightening steps to continue in coming months until inflation is brought under control, despite the risk of dampening economic growth.
