German inflation July 2025

German inflation dropped more than anticipated to 1.8% in July, as reported by statistics agency Destatis on Thursday.

Economists surveyed by Reuters had predicted inflation to decrease to 1.9%. The July figure contrasts with the 2% recorded in June, aligning the German inflation rate with the European Central Bank’s target.

The data is standardized across the euro zone for comparability. Euro zone inflation data is expected later this week, with forecasts pointing to a 1.9% reading.

Core inflation, excluding food and energy costs, remained at 2.7% in July, unchanged from the previous month. Meanwhile, services inflation, a key metric, eased from 3.3% in June to 3.1% in July.

Carsten Brzeski, ING’s global head of macro, noted on Thursday that the latest data indicates Germany is currently undergoing a disinflation process. He expects headline inflation to stay below, but close to, the 2% mark.

Economists are closely monitoring inflation figures to gauge the impact of U.S. President Donald Trump’s tariff policy. Recent months have seen sectoral tariffs and temporarily reduced reciprocal duties come into effect.

A recent agreement between the European Union and U.S. includes 15% tariffs on EU goods. The impact of these tariffs on prices in the U.S. is expected, but the effects on inflation elsewhere remain uncertain.

Brzeski mentioned, “It remains to be seen how European and US companies will react to US tariffs. While one scenario could see prices falling in the eurozone due to overcapacities and weaker sales in the US, globally operating companies might try to actually increase prices in Europe to offset profit squeezing in the US.”

Thursday’s inflation data follows Destatis’ publication of a preliminary reading of Germany’s second-quarter GDP on Wednesday. The economy contracted by 0.1% in the period, a decline from the 0.3% growth seen in the first quarter.