German Inflation Slows to 2.8 Percent in October as Fuel Tax Cut Bites

German inflation slowed more than expected in October, preliminary data from the Federal Statistical Office, Destatis, showed on Friday, Oct. 30. Consumer prices rose 2.8 percent from a year earlier, down from 3.3 percent in September, and prices fell 0.2 percent from the previous month. Analysts polled by Reuters had forecast harmonised inflation of 3.1 percent for October.

The harmonised index of consumer prices, the measure used across the euro area, also rose 2.8 percent from a year earlier and fell 0.1 percent on the month, Destatis said in press release No. 382 of Oct. 30, 2026. The figures are provisional, and the office will publish final results on Nov. 11, 2026.

Energy and core prices both ease

Core inflation, which excludes food and energy, fell to 2.1 percent from 2.4 percent in September. Energy prices rose 12.2 percent from a year earlier, a slower increase than the 14.9 percent recorded in September, Destatis reported. October was the first month of a government fuel tax reduction, introduced at the start of October and due to stay in place until the end of the year, and Reuters reported that it has led to a modest decline in fuel prices. Household energy prices also fell on the month, ING said, probably reflecting the fuel tax rebate.

State level readings published earlier on Friday pointed in the same direction. Inflation eased to 2.8 percent in Bavaria from 3.2 percent, to 2.7 percent in North Rhine-Westphalia from 3.3 percent, and to 2.9 percent in Lower Saxony from 3.3 percent, while Baden-Wuerttemberg fell 0.3 points to 2.6 percent and Saxony was unchanged at 2.8 percent.

What analysts took from it

ING said the fall was not only a tax rebate story, because core and services inflation also dropped, and it found no signs of indirect effects from higher energy prices on the rest of the economy. ING expects headline inflation to rise again and stay above 3 percent toward the end of the year and in early 2027, and it said inflation could take until the end of 2027 to fall below 2 percent again. For the European Central Bank, ING said, the data will comfort the doves at the bank.

The German release comes ahead of a euro zone inflation update due on Wednesday. Economists polled by Reuters expect inflation in the bloc to come in at 3.9 percent in October, slightly above September's 3.8 percent.