Inflation in Germany surpassed expectations and reached 2.9% in December.

• In December, the German inflation rate unexpectedly rose to 2.9%, according to the German statistics office Destatis.
• Reuters polled analysts who predicted the harmonized consumer price index would be 2.6%.
• The upcoming federal elections in Germany, scheduled for Feb. 23, come at a time of political uncertainty and are based on the latest economic data.

In December, the German inflation rate unexpectedly increased to 2.9%, according to the first reading from the German statistics office Destatis since the country's government was dissolved late last month.

The preliminary Monday print of the country's consumer price index is consistent with a 2.6% forecast from analysts surveyed by Reuters.

Destatis announced that the monthly harmonized consumer price index increased by 0.7%.

German inflation surpassed the European Central Bank's 2% target for the third consecutive month in December, after falling to 1.8% in September and rising to 2.4% in October, before remaining unchanged at that level in November.

In December, core inflation, which excludes food and energy costs, increased from 3% to 3.1%, while services inflation rose from 4% to 4.1%, as reported by the statistics office.

The upcoming federal elections in Germany, scheduled for Feb. 23, come at a time of political uncertainty and are based on the latest economic data.

In November, Germany's ruling coalition split apart when Chancellor Olaf Scholz dismissed former Finance Minister Christian Lindner and announced plans for early elections.

After the vote expressing loss of confidence in Scholz and the official dissolution of Germany's lower house of parliament by President Frank-Walter Steinmeier, the country has been taking constitutionally mandated steps to pave the way for elections.

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