On December 28, 2024, shoppers enjoyed after-Christmas sales in Munich, Bavaria, as German inflation rose unexpectedly to 2.9% for December, according to the statistical office Destatis. This figure surpassed analysts’ predictions of 2.6% and marked the third consecutive month of inflation exceeding the European Central Bank’s 2% target. Inflation had previously dropped to 1.8% in September but then increased to 2.4% in October and remained steady in November. The alarming inflation data emerges amid political unrest following the dissolution of Germany’s government in November when Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner and announced early elections. Scheduled for February 23, these elections follow constitutional procedures triggered by a loss of confidence vote against Scholz and the official dissolution of the lower house of parliament by President Frank-Walter Steinmeier. As the country braces for these pivotal elections, the latest economic indicators are crucial for understanding the impacts of political changes on economic stability, especially given Germany’s ongoing struggle with inflation.
