German Inflation Edges Up to 2.9% in April on Higher Fuel Costs

German consumer prices climbed 2.9 percent year-on-year in April, up from 2.6 percent in March and the highest annual rate since the start of 2024, the federal statistics office Destatis confirmed. The pickup was driven mainly by motor fuel and heating oil prices, which have surged across the European Union since the outbreak of the Iran war disrupted Gulf shipments and Strait of Hormuz traffic. Core inflation, which strips out energy and food, also edged higher.

The data complicates the European Central Bank's path back toward its 2 percent target after a year of broad disinflation. ECB officials have indicated they intend to pause further interest rate cuts until they can determine whether the energy shock is transitory. Bond markets in Frankfurt and Milan reacted with higher yields, while the euro firmed against the dollar after the release.

German ministers have warned that a sustained energy-driven price increase could weigh on already fragile household spending and on industrial confidence. The Bundesbank is scheduled to update its inflation projections at its next monetary policy roundtable. Eurostat will publish the harmonised euro-area inflation print later this week.