Inflation in Germany in May fell below expectations – impact on EUR/PLN

Inflation in Germany slowed more than expected

CPI inflation in Germany in May 2026 stood at 2,6% year on year, according to preliminary estimates from Destatis. That is lower than 2,9% in April and below 2,7% in March. For people following the euro exchange rate and the economic situation in the euro area, this is an important signal, because Germany is the region’s largest economy.

The biggest surprise, however, was the monthly drop in prices. CPI fell by 0,2% m/m, while the market had expected an increase of 0,1%. Economists had expected German inflation to remain at 2,9%, so the May reading came in clearly weaker than forecasts.

This still means inflation in Germany remains above the ECB (European Central Bank) target of 2%. For ordinary consumers, that translates into still elevated prices for many goods and services, even if the pace of increases is easing.

The lower reading came despite persistent tensions in the fuel market. The data show that energy in May was 6,6% more expensive than a year earlier, but that is still less than 10,1% y/y in April. The spring uptick in inflation was therefore largely linked to fuel prices.

It is also important that higher fuel prices did not spread more broadly across the economy. Core inflation, which excludes food, fuel and energy, stood at 2,5% y/y. That was unchanged from before. Services rose by 3,1%, goods by 2,2%, and food by 0,4%.

Sources

1. European Central Bank (press releases)