FX.co ★ German Inflation Confirmed at 1.8% in December

Germany's annual inflation rate decreased to 1.8% in December 2025, aligning with preliminary estimates and showing a decline from November's 2.3%. This figure fell beneath the European Central Bank's 2% target midpoint for the first time since September 2024 and represents the lowest inflation rate seen since that time. The inflation rate for goods saw a significant reduction, down to 0.4% from November's 1.1%, primarily due to smaller increases in food prices (0.8% compared to 1.2%) and a greater drop in energy prices (-1.3% from -0.1%). This decline in energy prices was largely driven by reductions in heating oil (-3.6%) and electricity costs (-1.8%). On the other hand, services inflation remained high and unchanged at 3.5%, spurred by notable rises in passenger transport (11.4%) and social services (7.7%). Core inflation, which omits volatile food and energy prices, dropped to 2.4%, marking its lowest level since June 2021. Concurrently, the EU-harmonized Consumer Price Index (CPI) decreased to 2.0% in December, its lowest position since July. For the entirety of 2025, the national inflation rate averaged 2.2%, while harmonized inflation settled at an average of 2.3%.