July 2025: Inflation rate remains constant; energy prices persistently hold back progress
In July 2025, Germany's inflation rate remained steady, with a preliminary result of 2.0% for the year-on-year Harmonized Consumer Price Index (HCPI). This stability, despite falling energy prices, was largely due to offsetting factors such as rising food prices, increased costs in travel, and some services.
Energy prices experienced a decline, with motor fuels dropping by 4.5% and household energy decreasing by 2.6%. However, food inflation rose to 2.2%, driven by higher prices for fruit, sugar, confectionery, and dairy products. The cost of international flights and package holidays also increased significantly, contributing to a monthly CPI increase of 0.3% after a pause in June.
Services inflation remained elevated but eased slightly to 3.1%. Notable price jumps were observed in passenger transport and parcel services. Core inflation, excluding food and energy, stayed steady at 2.7%.
Food prices overall were 2.2% higher compared to the previous year. Dairy products and eggs saw a substantial increase of +4.1%, while meat and meat products prices rose by 0.8%. Vegetables, on the other hand, became cheaper by 3.2%.
The prices for non-alcoholic beverages increased by 7.5%, with coffee, tea, and cocoa prices soaring by 16.6%. Water supply and other housing services prices increased by 3.9%, and vehicle maintenance and repair prices rose by 5.7%.
In contrast, clothing prices decreased by 3.5% partly due to seasonal factors. Insurance prices increased by 5.8%, and postal and courier services prices jumped by 9.0%.
Energy product prices were 3.4% lower in July 2025 compared to July 2024. Heating oil and fuels prices increased by 0.8%, and firewood, wood pellets, and other solid fuels prices rose by 1.1% compared to the previous month.
The month-on-month HCPI preliminary result was 0.3%, with food prices overall remaining almost stable (-0.1%) compared to the previous month. Prices for consumer goods and durable goods increased by 1.0% and 0.9% respectively from July 2024 to July 2025.
Monetary policy adjustments, such as European Central Bank interest rate cuts earlier in 2025, may have supported steady inflation levels by sustaining demand. The inflation rate, excluding food and energy, remained at +2.7% in July 2025.
In conclusion, the stability of overall inflation around 2% was the result of falling energy costs being balanced by higher prices for food, travel, and selected services, as well as steady core inflation pressures. This combination prevented a further decline in headline inflation despite cheaper energy.
Other finance-related factors, such as monetary policy adjustments by the European Central Bank, may have played a role in maintaining steady inflation levels by sustaining demand. The inflation rate, when excluding food, energy, and other goods like consumer goods and durable goods, remained at approximately +2.7%.
In light of the increasing costs in travel, food, and certain services, as well as the decline in energy prices, it's important to consider the impact of such changes on the overall financial landscape.
