German inflation cools on fuel tax cut, economy grows more than expected in Q3
EWG•German inflation slowed to 2.8% in October from 3.3% in September, while GDP grew 0.2% in the third quarter, above the 0.1% forecast. Analysts said public spending supported the recovery as private investment remained weak.
1. Inflation eases
Inflation slowed more than expected in October, the first month of a government fuel tax cut that runs through year-end. Energy price rises eased to 12.2% from 14.9%, while core inflation fell to 2.1% from 2.4%.
2. Growth exceeds forecast
Germany's GDP grew 0.2% in the third quarter, following growth of 0.3% in the second quarter and 0.4% in the first. Analysts said increased public spending on infrastructure and defence helped drive the recovery, while private investment remained weak.
3. Recovery risks remain
Analysts cautioned that the recovery may not be self-sustaining. Alexander Krueger said inflation would hover around 3.0% for some time and that an ECB rate hike could not be ruled out; the German government expects growth of 1.3% in 2026 and 1.1% in 2027.
