Berlin (Reuters) – German inflation calculated according to European standards (IPCH) increased by 2.8% over a year in February, as the previous month, according to preliminary data published Friday by the Federal Statistics Office.
Analysts interviewed by Reuters anticipated a slight slowdown in February, at 2.7%.
These data arise as the country is preparing for heated discussions in order to form a coalition after the anticipated legislative elections, which could let uncertainty hover for several weeks while the first European economy desperately needs a boost.
The increase in competition abroad, energy costs and high interest rates as well as uncertainty about economic prospects weighed heavily on German GDP, which contracted in 2024 for the second year in a row.
“Germany is in” stagflation “. Despite the severe recession of industry and the increase in unemployment rate, inflation does not seem to want to descend below the 2%mark,” said Friedrich Heinemann, economist at Zew.
It is nevertheless expected that the European Central Bank reduces its guiding rates next week for the sixth time since June since inflation in the euro zone is close to the target levels and should continue to decrease in the coming months.
Inflation of services slows down
The “Core” index of German inflation, which excludes the volatile elements that are food and energy, deceased 2.6% after 2.9% in January, while the inflation of services went below the 4% mark for the first time since October 2024, standing at 3.8%.
“In recent times, the ECB has been worried about increasing prices in the service sector. ECB members can now not breathe a blow, but also stick to their plan,” said Thomas Gitzel, economist at VP Bank.
Import prices increased more than scheduled in January, 3.1% over a year, the highest rebound in almost two years.
The German economy being dependent on the import for many intermediate and raw materials, the import price index has a delayed effect on general inflation, which means that it could remain tenacious.
(Written by Rachel More, Kate Entringer and Pauline Foret, edited by Augustin Turpin)
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