Inflation in Germany is rising at the fastest pace in three months

Inflation in Germany is rising at the fastest pace in three months, dampening investment hopes for a possible interest rate cut by the European Central Bank (ECB) in March, the Financial Times reports.

German inflation rose 3.8% in December, up from 2.3% the previous month, making it the highest rate on record, according to the Federal Statistical Agency.

Higher prices for gas, electricity and food, driven by the reduction of government subsidies that began last year, have caused a huge acceleration in annual inflation in most European countries.

Energy prices in Germany rose by 4.1%, reversing the previous trend of 4.5% decline in the previous month.

Commerzbank economist Marco Wagner warned that inflation in Germany could accelerate further in January due to tax hikes and subsidy cuts, predicting stabilization at 3% during 2024.

French data also showed an increase in inflation to 4.1%, up from 3.9% in November, reflecting accelerating growth in energy and service prices. The eurozone as a whole is expected to confirm this trend, showing an increase in inflation from 2.4% in November to 3% in December, ending a six-month decline.