German Inflation Jumps 2.1% in August, Exceeding Forecasts

According to data released on August 29th, 2025, German inflation rose by a higher-than-expected 2.1% in August. This was a significant jump from the 1.8% increase recorded in July.

Economists had predicted a 2% rise in the headline inflation figure, which is harmonized for comparability across the Eurozone. However, the actual data showed a more substantial increase, surprising markets and analysts.

The surge in German inflation is widely attributed to the ongoing impact of U.S. President Donald Trump's tariff policies. Various sectoral levies, as well as reciprocal duties, have been in effect in recent months, driving up prices for consumers and businesses.

The situation has been further complicated by a trade agreement struck between the U.S. and the EU in July 2025. This agreement includes a 15% tariff rate on many EU goods exported to the U.S., with some crucial sectors like pharmaceuticals also affected.

The inflationary pressures come at a challenging time for the German economy, the largest in the European Union. Germany's gross domestic product contracted by 0.3% in the second quarter of 2025, following a 0.3% expansion in the first three months of the year.

Economists and policymakers will be closely monitoring the situation in the coming months, as they seek to understand the full extent of the tariff-driven inflation and its potential impact on economic growth across the Eurozone.