The German central bank has predicted that inflation will decrease to 2.8 percent this year, according to their business cycle forecast. However, the increase in consumer prices, or inflation, may not subside as quickly as expected, warns the German central bank. Inflation is proving to be persistent, particularly in the service sector, where rising wages and cost pressures are significant factors driving inflation.
Germany’s economic performance has a significant influence on the euro area’s consumer price index. The ECB recently decided to lower its policy rates due to a considerable slowdown in inflation in the euro area. There is concern about the slowdown in inflation in the euro area, prompting many economists to believe that the ECB will lower its key interest rates next fall. The ECB’s economic forecast anticipates inflation in the euro area slowing to 2.5 percent this year, 2.2 percent next year, and 1.9 percent in 2026.
The German central bank also predicts that contractual wages and fringe benefits rose by 6.2 percent from a year ago in January-March, compared to a 3.6 percent increase in the previous quarter
