German inflation eases to lowest in almost three years

Inflation in Europe's largest economy slackened to 2.3%, its lowest level since June 2021. German consumer prices, harmonised to compare with other European Union countries, had risen by 2.7% year-on-year in February.

Core inflation in Germany, which excludes volatile food and energy prices, was at 3.3% in March, down from 3.4% in February.

Underlying inflation is closely watched by the European Central Bank to gauge the durability of price pressures.

"In March 2024, food was cheaper for consumers than a year before for the first time since February 2015," said Ruth Brand, president of the statistics office. Food prices went down 0.7% year-on-year.

Energy prices were 2.7% lower in March than in the same month of the previous year. Since the beginning of the year, energy prices have consistently fallen, dragging headline inflation down.

However, core inflation has barely slowed.

Germany's inflation is supported by a rising trend in services, whose prices are increasingly dominated by a sharp jump in wage costs, as well as a rise in rents.

Prices for services overall were 3.7% higher in March on the year. Rents, with a price increase of 2.1% on the year, were significant for the price development for services.

While services prices showed a strong increase, the prices for goods increased by 1.0% on the year, below the increase seen in overall inflation.