Germany's inflation rate rose to its highest level in over two years in March 2026, driven largely by a sharp increase in energy costs linked to the ongoing conflict in the Middle East.
According to the Federal Statistical Office (Destatis), the consumer price index (CPI) increased by 2.7% year-on-year in March, confirming earlier provisional figures. This marks a notable rise from 1.9% in February and 2.1% in January, reaching its highest level since January 2024. On a monthly basis, consumer prices climbed by 1.1%.
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"The significant increase in the prices of energy products is driving up inflation. In particular, motor fuel and heating oil prices have risen sharply for consumers since the start of the Iran war," said Ruth Brand, President of the Federal Statistical Office (Destatis).
Energy prices were a key driver of the inflationary trend, rising by 7.2% compared with March 2025, the first annual increase since December 2023. Motor fuel prices surged by 20.0% year-on-year, while heating oil prices soared by 44.4%, reflecting developments in global oil markets following the escalation of tensions in Iran and the wider Middle East.
Despite these increases, household energy prices overall were 1.2% lower than a year earlier, supported by government measures including reduced transmission network charges and the removal of the gas storage levy. Prices for electricity (-4.5%), natural gas (-2.9%) and district heating (-1.2%) all declined year-on-year.
Food price inflation remained relatively subdued, rising by 0.9% annually, slightly below February's rate. Notable increases were seen in confectionery (+6.1%), fruit (+4.7%), vegetables (+3.8%) and meat (+3.6%), while edible fats and oils fell sharply (-17.6%), including butter (-29.1%) and olive oil (-11.8%).
Core inflation, excluding food and energy, stood at 2.5% in March, unchanged since the start of the year. Meanwhile, goods prices rose by 2.3%, with non-durable goods up 3.4% and durable goods increasing marginally by 0.5%.
Service prices continued to outpace overall inflation, rising by 3.2% year-on-year. Significant increases were recorded in social protection services (+7.0%) and passenger transport (+6.2%), partly driven by higher public transport costs. Prices also rose for vehicle maintenance, catering services and insurance, while rents increased by 1.9%.
Month-on-month, energy prices jumped by 7.7% in March, with motor fuels rising by 15.6% and heating oil by 43.2%. Higher costs were also observed for international flights (+10.0%), package holidays and clothing (+4.4% each), reflecting seasonal demand.
The data underscores the growing impact of geopolitical instability on European inflation, with energy markets remaining highly sensitive to developments in the Middle East.
More information:
Destatis
www.destatis.de
