(Feb 27): German inflation unexpectedly slowed to the European Central Bank’s (ECB) target as the economy recovered only slowly at the start of 2026.
Consumer prices rose an annual 2% in February — down from 2.1% in January, the statistics office said on Friday. Economists in a Bloomberg survey had expected the rate to remain steady.
While Germany’s economy is showing sign’s of life after a yearslong slump, the Bundesbank sees only “weak momentum”. Fiscal stimulus is set to be felt more from the spring, delivering growth of at least 1% this year and helping inflation settle at 2%.
ECB policymakers say they’re content with the rate of eurozone price gains and the level of borrowing costs, which have been left at 2% since last June. Economists don’t anticipate any changes in interest rates at least through the end of next year — even as inflation is currently undershooting the goal.
A reading for prices in the 21-nation bloc is due on Tuesday, with analysts expecting it to come in at 1.7%.
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Germany’s slowdown will be offset by stronger-than-anticipated price pressures recorded in France and Spain. Inflation in the former almost tripled to 1.1%, while it inched up to 2.5% in the latter.
While an ECB survey published earlier on Friday showed inflation expectations in the euro area retreating, consumers still saw prices rising 2.6% over the next 12 months — and 2.3% over five years.
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