Germany's inflation rate rose to 2.9 percent in April, marking the highest level since January 2024, as escalating energy prices continued to exert upward pressure on consumer costs in the country, official statistics revealed Tuesday. This increase follows a 2.7 percent rise recorded in March and represents a significant shift from the relatively stable near-2 percent inflation seen in previous months.

The Federal Statistical Office (Destatis) attributed the inflation surge primarily to a 10.1 percent year-on-year jump in energy prices in April, the steepest increase recorded in over three years. Ruth Brand, president of Destatis, linked the rise in energy costs directly to geopolitical tensions in the Middle East, particularly the conflict involving Iran. She noted that consumers have been particularly affected by persistent price increases in motor fuels.

Concerns over potential disruptions to energy shipments through the Strait of Hormuz, a critical route for global oil supplies, have driven fuel prices upward in recent months. Energy prices had already risen 7.2 percent compared to the previous year in March, following a 1.9 percent decline in February. In response to the rising fuel costs, the German government implemented a temporary cut in fuel taxes starting in early May, reducing levies on petrol and diesel by approximately 17 euro cents (around 20 U.S. cents) per liter. However, Brand clarified that this tax reduction was not reflected in the April inflation figures.

Beyond energy, Destatis data highlighted a broader impact on consumer prices, with goods prices increasing 2.9 percent in April compared with a year earlier, up from 0.8 percent in February and 2.3 percent in March. This trend indicates that the energy price shock is permeating other sectors of the economy.

Supporting this outlook, a survey by the Munich-based Ifo Institute showed an increase in price expectations among businesses. Its price expectations index rose to 31.6 points in April from 25.5 in March, reaching the highest level since January 2023. The institute emphasized that mounting energy costs are increasingly being passed on to consumers, particularly within the manufacturing, hospitality, and retail industries, suggesting ongoing inflationary pressures tied to the geopolitical crisis are likely to persist.