Germany’s Inflation Slows to 2.2% in March 2025

Germany’s annual inflation rate eased to 2.2% in March 2025, according to confirmed data from the Federal Statistical Office (Destatis). This marks a slight decline from 2.3% recorded in January and February, and down from 2.6% in December 2024. On a monthly basis, consumer prices increased by 0.3%.

The harmonized index of consumer prices (HICP), which facilitates comparison across the European Union, showed a 2.3% year-over-year rise and a 0.4% increase from the previous month.

Energy Prices Continue to Decline

A major factor in the easing inflation rate was the drop in energy prices. Energy costs were 2.8% lower in March compared to the same month last year, marking an acceleration from the 1.6% annual decrease recorded in previous months. Motor fuel prices fell by 4.6%, and household energy declined by 1.6%.

Electricity prices dropped by 2.1%, solid fuels like firewood and wood pellets were down 3.5%, and heating oil prices fell sharply by 8.4%. However, natural gas prices increased by 3.5%, and district heating rose by 9.5% compared to a year earlier.

Food Prices Show Renewed Acceleration

Food prices rose by 3.0% in March, up from 2.4% in February. This marked the fastest pace of food inflation since January. The sharpest increases were seen in edible fats and oils (+9.2%), fruit (+5.7%), and vegetables (+5.3%). Dairy products and eggs rose by 4.1%, while sweets and sugar-based products increased by 4.9%.

Moderate price rises were noted in bread, cereals, and meat, each up by 0.9%. Prices fell slightly for fish and seafood, down 0.4%.

Core Inflation Remains Elevated

When energy was excluded, the inflation rate was 2.7%. Removing both energy and food, the core inflation rate stood at 2.6%. These figures suggest that inflationary pressures remain strong in other areas of the economy beyond volatile components.

Service Prices Rise Strongly

Service prices rose by 3.5% year-on-year, contributing significantly to overall inflation. The largest increases were recorded in combined passenger transport services (+11.4%), services from social institutions (+10.0%), and insurance (+9.8%).

Other notable gains were seen in hospital services (+6.5%), vehicle maintenance (+5.8%), and dining out (+4.2%). Rents excluding heating increased by 2.1%. Some service prices dropped, including international flights (-8.7%) and telecommunications services (-1.1%).

Goods Prices Show Modest Growth

The price of goods increased by 1.0% compared to March 2024. Non-durable goods rose by 1.3%, while durable goods were up 0.4%. Significant price increases were seen in non-alcoholic beverages (+6.9%) and tobacco products (+4.2%). At the same time, prices declined for mobile phones (-9.0%), IT equipment (-6.0%), and energy.

Monthly Price Developments

Compared to February, consumer prices rose 0.3% in March. Seasonal patterns pushed clothing prices higher by 4.3%, while package holiday prices increased by 3.1%. Food and non-alcoholic beverages climbed by 0.4%, driven by gains in coffee (+4.6%), sweets (+1.8%), and meat (+0.7%).

In contrast, prices fell for edible fats and oils, as well as fresh vegetables, both declining by 1.8%. Energy prices decreased 1.5% from the previous month, with motor fuel down 3.4% and heating oil down 5.5%.

Source: Destatis

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