German Inflation Hits 2% Amid Easing Price Pressures

Germany's annual inflation rate eased to 2% in June 2025, meeting the European Central Bank's target for the first time since October 2024 and surprising analysts who expected a rise. The slowdown was mainly due to easing food inflation and falling energy prices, with both goods and services inflation also moderating. Core inflation, excluding food and energy, remained at 2.7%, indicating ongoing underlying price pressures. Regional data confirmed falling inflation in key German states. Recent oil price volatility caused by Middle East tensions had limited impact as hostilities eased and prices stabilized. The ECB is expected to keep its policy options open amid persistent uncertainty in core inflation and external risks.