German inflation rises to 2.9% in August on energy price surge

Story Timeline
12 hours · 2 summary articles
German inflation rises to 2.9% in August on energy price surge
Oil prices jump over 2% after US strikes on Iran in Strait of Hormuz spark supply fears
Continuation
German inflation rose to 2.9% in August, up from 2.8% in July and 2.3% in June, according to a preliminary estimate from the Federal Statistical Office released on Monday. Energy prices drove the increase, surging 10.5% year-on-year, compared to 8.3% in July, as the renewed conflict between the U.S. and Iran pushed oil prices higher. In North Rhine-Westphalia, heating oil costs rose 33.6%, diesel 35.6%, and gasoline 24% compared to August 2025, with fuel prices alone climbing 2.6% from July to August due in part to low water levels on the Rhine disrupting barge deliveries to refineries, the state statistics office noted.
Food prices increased just 0.1% year-on-year, down from 0.4% in July, while core inflation—excluding energy and food—remained at 2.4%. Services such as insurance and travel saw prices rise 2.8%, slightly below the overall rate. The European Central Bank’s target of 2% inflation remains unmet, with economists expecting a potential interest rate hike at the ECB’s September meeting, as minutes from its July session suggested further increases may be necessary if inflation outlook does not improve significantly.
The Euribor, the benchmark rate for variable mortgages in Spain, closed August at 2.9512%, its highest level in two years, up from 2.855% in July and 2.114% in August 2025. The rate briefly exceeded 3% on August 21 and 26, a level not seen since September 2024. Analyst Antonio Castelo of iBroker said the rise reflects market expectations of stricter ECB monetary policy, with the central bank likely to raise rates if inflation persists above 3%. A 150,000 euro mortgage at Euribor plus 1% over 25 years would see annual payments rise by about 810 euros, while a 300,000 euro loan under the same terms would face a 1,620 euro increase, according to calculations based on the August rate.
Oil prices surged above $90 per barrel on Monday after U.S. strikes on Iran’s Larak Island, exacerbating concerns over supply disruptions in the Strait of Hormuz. European gas prices also spiked, with the Dutch TTF benchmark exceeding €70 per megawatt-hour. In Finland, petrol prices rose 23% and diesel 40% compared to August 2025, while Cyprus industry representatives warned diesel could near €2 per liter as tax relief expires.
Global markets reacted to the developments, with European stocks closing lower amid fears of further rate hikes. The Ibex 35 in Spain fell 0.34% on Monday, though it gained 0.97% for the month. Federal Reserve Chair Kevin Warsh’s hawkish remarks at Jackson Hole last week reinforced expectations of a U.S. rate increase in September, with investors pricing in a 60% probability.
Follow us for live European news
- 5
- 4
- 2
- 1
- 1
- 1
- 1
- 1
- 1
- 1
3 further sources not geolocated








