Inflation Surpasses Expectations in Germany

According to preliminary data released by the Federal Statistical Office of Germany, annual inflation in Germany increased in December due to a rise in food prices and a smaller decline in energy prices compared to previous months, exceeding expectations. The annual consumer price inflation rate rose to 2.8%, higher than the 2.6% forecast, and according to harmonized data for comparison with other European Union countries, it accelerated from 2.4% in November to 2.6%. Commerzbank’s chief economist Joerg Kraemer pointed out that "the year ended with unpleasant news on the inflation front," highlighting that the inflation problem has not been resolved. Kraemer added that inflation could remain similarly high in January due to elevated CO2 emissions and insurance service prices. Carsten Brzeski, ING's global head of macro, noted, "The celebrations for successfully taming the inflation monster are premature," adding that the latest reading has "brought back the ghost of stagflation to the European Central Bank." Eurozone inflation is expected to rise from 2.2% in November to 2.4% in December.