The current inflation situation in Germany is of great importance for savers and investors, especially regarding the monetary policy of the European Central Bank (ECB) and the purchasing power of consumers.
Current Inflation Rate in Germany
In May 2025, the inflation rate in Germany was expected to be 2.1% compared to the same month last year. This corresponds to a slight increase of 0.1% compared to the previous month, April 2025. The core inflation, which is the inflation rate excluding food and energy, was around 2.8%.
Food prices remained a significant price driver with an increase of about 2.8%, while services became approximately 3.4% more expensive. In contrast, energy prices fell significantly again by about 4.6%, mainly due to declining world market prices for crude oil.
Importance for Savers and Investors
- Loss of Purchasing Power: An inflation rate of over two percent means a noticeable loss of purchasing power of money. For savers, this means: Their money loses real value if it is not appropriately interest-bearing.
- Monetary Policy of the ECB: The ECB has set a target inflation rate of just under two percent in the euro area. With a current rate of about 2.1%, Germany is slightly above this target. Due to the declining price pressure, the ECB has recently lowered its key interest rate seven times.
- Impact on Interest Rates: Low key interest rates tend to mean low returns on traditional savings products like overnight or fixed-term deposits. This makes it even more challenging for savers and investors to protect their wealth against inflation.
Conclusion
The current moderate inflation poses a challenge: While it has not yet spiraled out of control (as in previous years), it remains high enough to cause losses in purchasing power. For investors, this means increased pressure on traditional savings forms and a heightened need for inflation-protected or higher-yielding investments.
The development of inflation will continue to be closely linked to the monetary policy decisions of the ECB – especially regarding interest rates – which will have implications for both loans and investment returns. Therefore, savers should regularly review their strategies and, if necessary, diversify.
In summary, the inflation situation in Germany remains a central topic for consumers and financial market participants in 2025.