Germany's inflation rate for September 2025 rose to 2.4%, up from 2.2% in August, mainly driven by increases in food and service prices, despite energy prices decreasing slightly.

Energy prices in Germany decreased by 0.7% compared to the previous year, but electricity and gas costs remain significantly higher than pre-2022 levels, with electricity rising by 2.9% and gas over 75% more expensive since the Ukraine conflict.

Prices for services, including insurance and transportation tickets, increased by 3.4%, reflecting broader inflation effects, while housing costs like rent rose modestly by 1.8%.

Food prices experienced varied changes, with staples like bread and meat rising by 1.5% and 3.5%, while some items like cooking oils and butter became cheaper or stabilized.

Consumer purchasing power continues to decline as inflation persists above the ECB's 2% target, with core inflation reaching 2.8%, the highest in three months.

The European Central Bank held interest rates steady at 2.0% in September amid economic uncertainties, contrasting with the US Federal Reserve, which has begun cutting rates, signaling different monetary policy paths.

Recent inflation data across Europe suggests a cautious ECB approach, with no immediate rate hikes expected despite inflation remaining above the target, as signs of slowing price pressures emerge.

In the clothing sector, women's clothing prices increased sharply by 6% month-to-month, while men's clothing saw slight decreases over the year.

Housing costs like rent increased modestly by 1.8%, and utility prices rose slightly, with fuel prices showing mixed movements—diesel slightly more expensive and gasoline slightly cheaper.

Energy prices in September decreased by 0.7%, but electricity costs rose by 2.9%, and gas prices remained high compared to pre-2022 levels, although they are slightly lower than the previous half-year.

Fuel prices showed divergent trends, with diesel increasing by 0.7% and gasoline decreasing by 0.2%, indicating shifts in transportation costs.

Overall inflation across Europe remains below levels from two or three years ago, with Italy and France experiencing increases but still below the ECB's 2% target, reinforcing the cautious monetary stance.

The ECB's inflation target of 2% remains elusive, and recent data suggests interest rate hikes may pause as inflation slows but stays above the target.