Energy price surge drives Germany’s inflation to two-year high

Inflation in Germany accelerated to 2.7% year-on-year in March, reaching its highest level since January 2024, driven primarily by a sharp rise in energy prices, according to the Federal Statistical Office.

The increase was largely linked to surging energy costs amid heightened tensions surrounding Iran, Caliber.Az reports, citing Der Spiegel.

Household energy and fuel prices rose by 7.2% compared to a year earlier.

Particularly steep increases were recorded for light heating oil (+44.4%) and motor fuels (+20%), with petrol prices consistently remaining above €2 per litre.

Despite price controls introduced at petrol stations from April 1, the measures have so far had little effect.

Gas and electricity tariffs for new customers have also increased, although they remain below last year’s peaks.

Against this backdrop, a two-week ceasefire agreement between the United States and Iran, reached after Easter, may provide some relief.

Tehran has also pledged to unblock the Strait of Hormuz, a key route for global oil and gas supplies, leading to a decline in global energy prices.

However, economists warn that if the conflict persists, rising energy costs could spill over into other sectors of the economy, increasing production and transport expenses and pushing up prices for goods and services.

Meanwhile, food price growth slowed to 0.9%, although certain items continue to rise, including chocolate (+9.6%) and eggs (+14.8%).

The services sector remains a key driver of inflation, with prices increasing by 3.2% year-on-year.

Rising inflation is already affecting living standards: according to a YouGov survey, 12.8% of Germans say they struggle to cover everyday expenses, rising to nearly a quarter among households earning less than €2,500 per month.

By Bakhtiyar Abbasov