Bundesbank Says German Inflation to Stay Elevated, Summer Growth Stalled

Germany's inflation will remain elevated as energy costs tied to the Iran conflict and 2027 healthcare reforms push prices higher, the Bundesbank said on September 21, 2026. August inflation stood at 2.9%. The reforms, alongside pharmacy supply rule changes introduced this year, are expected to temporarily add nearly half a percentage point to inflation in the first half of 2027, the central bank said in its monthly report. Europe's largest economy lost momentum over the summer, weighed down by weaker exports, consumption and droughts, and grew only slightly in the third quarter. The Bundesbank still expects a recovery in the final three months of the year, citing brighter manufacturing surveys, fiscal support and continued infrastructure spending, though it cautioned the outlook depends on Middle East developments and normalizing water levels on key waterways.