Germany Inflation Soars to 14-Month High in March

(MENAFN) Germany's consumer prices rose at their fastest pace in over a year in March, with annual inflation confirmed at 2.7% — the highest reading since January 2024 — as the Iran war sent energy costs surging, official figures from Destatis revealed Friday.

The reading aligned with both the preliminary estimate and analyst expectations, offering no surprise to markets but underscoring the mounting cost pressures rippling across Europe's largest economy.

Energy prices were the primary culprit, jumping 7.2% year-on-year — their first annual increase since late 2023 — with motor fuel prices soaring 20% and heating oil posting a dramatic 44.4% rise. On a monthly basis, overall consumer prices climbed 1.1%, as energy costs alone surged 7.7%, reflecting deepening supply anxiety stemming from Middle East tensions.

Food price growth offered modest relief, slowing to 0.9% annually from a faster pace in February. Core inflation — which strips out food and energy — held steady at 2.5%, signaling that underlying price pressures remain contained for now.

Goods prices advanced 2.3% compared to the same period a year ago, while services inflation outpaced the headline figure at 3.2%, with transport, rents, and social services emerging as key drivers.

The data lands against the backdrop of a severe global energy shock. The Iran war severed flows through the Strait of Hormuz — a vital passage for international crude oil and LNG shipments — catapulting Brent crude toward $120 a barrel before prices stabilized near $100. Ongoing shipping restrictions have kept supply concerns elevated, even as a ceasefire took hold.

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