Customers buy in a supermarket in Munich on March 8, 2025 for fresh fruit and vegetables in Munich.
Michael Nguyen | Nurphoto | Getty pictures
German inflation came in March with a lower than expected 2.3%, as preliminary data from the statistics office of the state of destatis showed on Monday.
It is compared to 2.6% print in February, which was revised by a preliminary reading, and a survey among the economists from Reuters who expected inflation available at 2.4%. The pressure is harmonized for comparability in the entire euro range.
The harmonized inflation increased by 0.4%monthly. The core inflation, which excludes food and energy costs, was 2.5% below 2.7% in February.
In the meantime, the inflation of the services that had been sticky for a long time left 3.8% in March to 3.4% in the previous month.
A critical time for the economy
The data comes at a critical time for the German economy, since the tariffs of US President Donald Trump have at home on the tariffs of the tax authorities and economic policy.
Trading is an important pillar for the German economy, which makes it more susceptible to uncertainty and the developments that are currently dominating global trade policy. A number of taxes from the USA will come into force this week, including 25% tariffs for imported cars – a sector that is the key to the German economy. The political managers and heavyweights of the country and the automotive industry have made Trump's plans.
How the trade conflict affects inflation is still unclear, Carsten Brzeski, Global Head of Macro at ING on Monday.
“The emerging escalation of the trade voltages and possible European retaliation tariffs could contribute to inflation pressure at short notice,” he said.
“In the long term, however, every trade war could also become a disinflation for Germany and the euro zone if growth would weaken, and companies may have to sell their increased inventory,” said Brezeski and found that goods that were originally produced for the US market could ultimately be sold in Europe at a reduced price.
In the meantime, the political parties of Germany work according to the results of the national elections in February 2025 to found a new coalition government. In addition to her sister party of the Christian Social Union and the Social Democratic Union, the negotiations between the Christian Democratic Union are underway.
While various issues seem to stay between the parties, their discussions have already achieved some results. At the beginning of this month, the legislators in Germany voted for a large financial package that contained changes in the long-term debt rules for higher defense spending and a 500 billion euro infrastructure fund ($ 541 billion).
ECB interest rates ahead
The number of inflation on Monday from Germany, paired with the latest data from other large euro zone countries such as Spain and France, indicate that the inflation of the euro zone headings in March will probably be left after Franziska Palma, Senior Europe Economist at Capital Economics.
The French harmonized inflation remained 0.9% and lower than expected in March. In Spain, the reading fell greatly to 2.2%, from 2.9% in the previous month and also lower than expected.
The inflation numbers of the euro zone are due on Tuesday. Economists surveyed by Reuters predicted the reading with 2.3%.
“Germany's numbers together with those from France, Italy and Spain indicate that the inflation of the Euro zone key line will probably be 2.2% in March, a bit below expectations,” said Palmas on Monday. The core inflation is expected to become unchanged or slightly lower than in February.
“The inflation of the services has probably also liked what ECB officials will please,” she said, adding that “the chunky fall in Germany should more than compensate for the 0.1%increase in France and Italy.”
“This increases the likelihood that the ECB in April in April again in accordance with our forecast instead of during the break,” said Palmas.
The markets had the last prize design in an opportunity of around 91% for an interest rate of 25 base from the ECB on April 17, as LSEG data showed.
Comments are closed.