Inflation in Germany accelerated to 2.8% in March

Inflation in Germany accelerated to 2.8% year-on-year in March of this year (up from 2.1% in February). This is according to preliminary data from the Federal Statistical Office (Destatis).

Core inflation, which excludes food and energy prices, remained unchanged from February at 2.5%.

Energy prices in the country rose by 7.2% year-on-year in March 2026—the first increase since December 2023.

This rise in inflation is just the beginning, according to ZEW economist Friedrich Heinemann, as quoted by Reuters. He noted that even before the war with Iran, the country was already facing persistent inflation in the services sector. In March, this figure remained unchanged—at 3.2%—for the third consecutive month.

Risks to core inflation are skewed to the upside, as the secondary effects of the energy price shock are impacting prices, particularly for transportation services and basic transportation costs for goods, notes Klaus Vistesen, chief Eurozone economist at Pantheon Macroeconomics. The fertilizer supply shock also threatens higher food inflation, although the lag here is longer than in the energy market.

According to an Ifo Institute survey released on March 30, German companies expect a significant rise in prices due to the conflict in the Middle East. The price expectations index rose to 25.3 points in March from 20.3 in February.

It is worth noting that German business sentiment deteriorated sharply in March—the war in Iran has made companies more skeptical about the expected economic recovery in the country.