German inflation confirmed at 3.3%, highest figure since December 2023

German inflation exceeded 3% for the first time in nearly three years in September, driven by soaring energy prices, the Federal Statistical Office said on Tuesday, confirming its flash estimate. 

Consumer prices rose 3.3% year-on-year last month, the Wiesbaden-based agency said, the highest figure since the 3.7% seen in December 2023. 

"The rate of inflation exceeded the 3% mark in September, and therefore reached a new record high this year," said the agency's president, Ruth Brand.

In September, consumers in Germany paid 14.9% more for motor fuels and household energy than a year earlier. That marked the third consecutive month in which energy price increases accelerated, reaching the highest rate of increase since February 2023.

Petrol prices rose by around 37.1% year-on-year in September, while light heating oil rose by almost 75%. 

Firewood, wood pellets and other solid fuels (up 15.6%) also became significantly more expensive compared with the same month last year. By contrast, electricity (-5.5%), natural gas excluding operating costs (-2.8%) and district heating (-1%) became cheaper.

Inflation was already elevated in August at 2.9%. Consumer prices rose 0.6% from August to September of the current year.

Energy has been the main driver of inflation worldwide since the outbreak of the Iran war. Due to the blockade of the Strait of Hormuz, which is vital for the global oil and gas trade, oil prices have risen sharply this year, regularly breaching the $100-per-barrel mark.

Food prices, by contrast, rose only marginally in September, by 0.4%. Eggs (up 15.2%) and fresh vegetables (up 12%) became notably more expensive. Cooking fats and oils (-15%), including butter (-29.5%), and fresh fruit (-4.9%) became cheaper.

Services were 2.7% more expensive, which was below the overall average. Net cold rent rose 1.9%.

"The rise in inflation in September, as in every month since the start of the Iran war, is almost entirely attributable to higher fuel and heating oil prices," said Silke Tober, inflation expert at the Institute for Macroeconomics and Business Cycle Research (IMK) of the Hans Böckler Foundation. She said the inflation rate excluding the more volatile prices for food and energy had remained at 2.4%, as in August.

Despite criticism from many experts, the government has again introduced a fuel tax rebate that will cut taxes on petrol by around €0.17 ($0.19) per litre from October 1 until the end of the year. Economists estimate this could reduce the inflation rate by around 0.2 percentage points.

According to forecasts, 2026 is nonetheless set to become the sixth consecutive year in which Germany's inflation rate exceeds 2%.

With prices also rising in other major eurozone countries such as France and Spain, economists expect the European Central Bank (ECB) to raise interest rates for a third time this year.

In September, inflation in the eurozone rose to 3.8%, which was highest level in three years and well above the ECB's medium-term target of 2%.