Germany's Federal Statistical Office released preliminary consumer price index (CPI) data for August on Monday, showing a year-on-year increase of 2.9%.

This figure is up from July's 2.8% reading and matches the level seen in April, marking the highest point in nearly four months. On a month-on-month basis, prices rose 0.2%, a slowdown from the 0.8% increase recorded in July.

Core inflation, which strips out volatile food and energy prices, is estimated at 2.4% for the month, unchanged from the preliminary reading in July. Energy prices were a key driver, surging 10.5% year-on-year, a significant acceleration from 8.3% in July and 3.4% in June.

The EU-harmonized index also rose 2.9% year-on-year. Market forecasts ahead of the release had predicted a median annual CPI increase of around 3.0%, with the harmonized figure expected at roughly 3.1%, meaning the actual numbers came in slightly below expectations. Final verified data is scheduled for release on September 10th.

State-Level Data Points to National Trend

The national preliminary figure is compiled from results released by individual German states earlier in the day. All states that had published their numbers by mid-morning showed annual increases exceeding their July readings: Bavaria rose to 2.9% (from 2.8%), North Rhine-Westphalia climbed to 2.9% (from 2.7%), Saxony edged up to 2.9% (from 2.8%), Baden-Wuerttemberg reached 2.6% (from 2.5%), Hesse jumped to 3.0% (from 2.7%), and Brandenburg hit 3.1% (from 2.7%).

On a monthly basis, Bavaria and North Rhine-Westphalia both recorded increases of 0.2%, while Baden-Wuerttemberg rose 0.1%, all falling below the 0.6% to 0.9% range seen across states in July. The state-level data pushed the national annual rate from 2.8% up to 2.9%, though it did not lift it further to 3.0%.

Energy Accelerates While Food and Services Cool

According to official explanations, energy prices have accelerated for two consecutive months, with annual increases of 3.4% in June, 8.3% in July, and an estimated 10.5% in August. The combination of the expiration of temporary fuel tax relief introduced in July and Middle East conflicts driving up crude oil prices and refining margins were key factors behind this surge. Together, household energy and vehicle fuels account for approximately 73.90 per mille of the German CPI basket.

Contrasting with the energy acceleration, both food and services showed signs of slowing. Food prices rose just 0.1% year-on-year in August, down from 0.4% in July, while the services sector saw its annual rate ease to 2.8% from 2.9%. Core inflation, excluding food and energy, held steady at 2.4%. Overall, the headline rate moved up from 2.8% to 2.9%, with a clear structural pattern of faster energy price growth offsetting slower gains in food and services.

Looking back, the national annual rate also reached 2.9% in April, when energy prices were up 10.1% year-on-year. It then retreated to 2.6% in May and fell further to 2.3% in June, before returning to 2.8% in July as energy prices began accelerating once more.

Harmonized Index Remains Above ECB Target

The harmonized consumer price index also came in at 2.9% year-on-year, remaining well above the European Central Bank's 2% target. The eurozone's flash reading for August is typically released after Germany's data, and had not yet been published at the time of this report. As the largest economy in the eurozone, Germany's inflation reading carries significant weight for the ECB's monetary policy direction.