Germany’s inflation surged to 2.4% in October, surpassing the European Central Bank’s 2% target, despite the country narrowly avoiding a technical recession in the third quarter. The preliminary figure, released by the German statistics office Destatis, is standardized across the euro area for comparison.
Analysts surveyed by Reuters had predicted that harmonized inflation would be at 2.1% in October. Harmonized inflation had fallen to 1.8% in September after hitting the European Central Bank’s 2% target in August.
Core inflation, which excludes more volatile food and energy prices, rose to 2.9% in October, according to the German statistics office, up from September’s 2.7% reading. Services inflation also increased to 4% in October from 3.8% in the previous month.
Deutsche Bank economist Sebastian Becker mentioned in a CNBC-translated note that the uptick in core inflation indicated that the issue of rising prices was not resolved and required further patience. He noted that short-term indicators pointed towards higher inflation due to base effects, but the current labor market weakness suggested a gradual easing of the core figure next year.
The German federal labor office reported a higher-than-expected rise in the number of unemployed individuals in October, as per Reuters. Carsten Brzeski, global head of macro at ING, anticipated further inflation growth in the last two months of 2024, with inflation likely to remain between 2% and 3% throughout the following year.
Earlier on Wednesday, Destatis published a preliminary report on Germany’s gross domestic product, showing a 0.2% growth in the third quarter compared to the previous three months. This growth surprised analysts who had forecasted a 0.1% decline, helping Germany narrowly avoid a technical recession, defined by two consecutive quarters of economic contraction.
Destatis also revised the second-quarter GDP figures to show a 0.3% contraction, down from the previously reported 0.1% decrease. Consumer price data for the wider eurozone is expected to be released on Thursday.
