German inflation cooled more than expected in December, easing to 2.0% year-on-year, with core prices also showing a slowdown. The data comes ahead of the euro zone’s inflation report and suggests the European Central Bank may hold interest rates steady.

German inflation slows more than expected in December

January 6, 2026

Maria Martinez

German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, January 2, 2026.

Reuters

German inflation slowed more than expected in December, dipping to 2.0% year on year, preliminary data from the federal statistics office showed on Tuesday.

Analysts polled by Reuters had forecast EU-harmonised inflation falling to 2.2% from last month's 2.6%.

Germany's core inflation rate, which excludes volatile food and energy prices, fell to 2.4% from 2.7% in the previous month.

The German data comes ahead of the euro zone inflation release on Wednesday.

Inflation in the bloc has hovered around the European Central Bank's 2% target, boosted by price hikes in the services sector, and is expected to stay there for the foreseeable future.

Most analysts expect the ECB to keep its interest rate unchanged in the coming months.

-Miranda Murray and Friederike Heine/Reuters