After several months of relative stabilization, inflation in Germany accelerated markedly. According to preliminary data from the Federal Statistical Office (Destatis), inflation in March 2026 reached 2.7% year-on-year. This is the highest level since early 2024. Compared with February 2026 (1.9%), prices rose by 1.1% in just one month.
The primary cause of the sudden increase is a sharp rise in energy prices. For the first time since December 2023, energy prices went up — by 7.2% compared with March 2025. Experts are unanimous: this is a direct effect of the war in Iran and the associated oil shock. Iran's closure of the Strait of Hormuz caused a dramatic surge in crude oil prices on global markets. Petrol prices rose 17.8–19.7% year-on-year, diesel by as much as 30.7%, and light heating oil in Bavaria by as much as 44.8%.
Prices at petrol stations frequently exceeded 2 euros per liter, while 100 liters of heating oil cost as much as 149 euros in some areas. These increases are quickly translating into higher transportation and production costs, which will in time hit the prices of many other goods.
In addition to fuel, services also grew more expensive (+3.2% year-on-year), including restaurants, hotels (+6.3% for overnight stays), holiday packages (+4.9%), and care and social services (+6.8%). Food prices also rose. Core inflation excluding food and energy remained stable at 2.5%.
Holger Schmieding, chief economist at Berenberg Bank, commented: the inflation data show exactly what every driver has already noticed — the war in Iran is driving fuel and heating oil prices. In the coming months, inflation could exceed 3%, and in the event of an escalation of the conflict, even 4% or more.
Klaus Wohlrabe from the Ifo Institute added that price pressure in Germany is clearly rising again. Companies are increasingly passing on rising costs to the prices of their products. The Bundesbank forecasts a marked increase in inflation in the near term. Financial markets are already pricing in an ECB interest rate hike before summer.
As recently as December 2025, inflation in Germany stood at 1.8%. March 2026 brought a sharp reversal of the trend. The German economy, already weakened by sluggish economic conditions, is taking yet another blow. Higher energy costs could reduce consumers' purchasing power and harm private consumption, particularly ahead of the Easter holidays.
