German Inflation Reaches Six-Month Low in April 2025

Final data released by Germany’s Federal Statistical Office (Destatis) revealed that consumer price inflation eased to its lowest level in six months in April 2025. The decline was primarily driven by falling energy prices, while food prices continued to exert upward pressure on overall inflation.

Consumer Price Index Performance

Germany’s Consumer Price Index (CPI) rose by 2.1% year-on-year in April, slightly down from 2.2% in March. This figure aligns with the preliminary estimates released earlier, indicating a modest slowdown in the pace of inflation.

Core Inflation Rebounds

In contrast to the general trend, core inflation – which excludes volatile food and energy prices – increased for the first time in four months, reaching 2.9% in April, up from 2.6% in March. This signals persistent underlying price pressures, particularly in the services sector.

Harmonized Index of Consumer Prices (HICP)

The Harmonized Index of Consumer Prices (HICP), used for EU-wide inflation comparisons, also showed a continued downward trend for the third consecutive month. It dropped to 2.2% in April from 2.3% in March, in line with market expectations.

Sectoral Price Developments

Energy: Energy prices fell sharply by 5.4% compared to April last year, significantly contributing to the decline in headline inflation.Food: Food prices continued to rise, registering an annual increase of 2.8%, which moderated the overall disinflationary effect.Services: Inflation in services accelerated to 3.9% in April, up from 3.5% in March, reflecting ongoing demand and cost pressures in the sector.Goods: Price increases for non-food goods slowed considerably, with inflation dropping from 1.0% in March to 0.5% in April.

The easing in Germany’s headline inflation reflects partial success in mitigating price pressures, especially in the energy sector amid lower oil and gas costs. However, the rise in core inflation and services prices suggests that inflationary risks remain embedded in the domestic economy.

While the headline inflation rate is on a downward path, persistent core inflation could prompt the European Central Bank to remain cautious in adjusting interest rates. Close attention should be paid to developments in the labor market and the services sector, as they could shape inflation dynamics in the second half of the year.