Germany’s annual inflation rate rose 2.6% in May 2026, easing from a two-year high of 2.9% in the previous month and confirming preliminary estimates. Price growth moderated across several categories, including food and non-alcoholic beverages (0.7% vs. 1.5% in April), alcoholic beverages and tobacco (3.8% vs. 4.3%), housing and utilities (1.4% vs. 1.6%), and restaurants and hotels (2.7% vs. 3.4%). In contrast, energy prices remained elevated, rising 6.6% amid the US-Iran war, although the increase eased from 10.1% in the previous month due to the temporary reduction of the energy tax on gasoline and diesel. Additionally, inflation accelerated in health (2.3% vs. 2.0%) and recreation and culture (2.1% vs. 1.1%). On a monthly basis, consumer prices fell 0.2% in May, following a 0.6% increase in the previous month, in line with preliminary estimates. Meanwhile, the annual HICP edged down to 2.7% from 2.9% in April, remaining well above the European Central Bank’s 2% target.