German inflation hits nearly three-year high

According to preliminary data, consumer prices increased 3.3% year-on-year, exceeding market expectations of 3.2%. Monthly inflation came in at 0.6%, also above the 0.5% forecast. Higher energy prices were a key driver of the acceleration, while core inflation remained unchanged at 2.4%.

Germany’s figures, following higher-than-expected inflation readings in France, Italy and Spain, signaled renewed price pressures across Europe. Eurozone inflation data is due on October 2, with economists expecting the annual rate to rise to 3.7%. The elevated inflation outlook has also intensified debate over whether the European Central Bank will deliver another interest rate hike in October.