Inflation in Germany falls to 1.6% in September

Inflation in Germany fell in September to an annual rate of 1.6%, the second month in a row that inflation has been below the 2% threshold, according to preliminary figures released by Germany's Federal Statistical Office on Monday.

In August, annual inflation in Europe's largest economy was 1.9% compared to the same month in the previous year, the agency previously reported.

That puts inflation in Germany at its lowest level in more than three years.

Economists predict that inflation in Germany will continue to fall.

In their recently published autumn report, a group of leading German economic research institutes forecast consumer prices to rise by 2.2% in the current year, down significantly from 5.9% in 2023. They predicted inflation will be 2.0% in 2025.

Lower inflation in Germany will likely give the European Central Bank (ECB) more leeway to adjust key interest rates as monetary policy leaders seek to balance fighting inflation with economic growth.

The ECB is explicitly tasked with bringing the annual inflation rate across the eurozone below 2%. The ECB's Governing Council approved an unprecedented series of interest rate increases beginning in July 2022 aimed at addressing high inflation across the bloc.

But the ECB cut rates in June of this year, and again earlier this month, citing declining inflation. The ECB's Governing Council next meets in October.