German inflation dropped to 1.9% in February 2026, driven by lower food and energy prices, but core inflation stayed high, keeping rate cuts uncertain.

German inflation eased to 1.9% in February 2026, down from 2.1% in January, according to final data from Destatis, meeting expectations and driven by slower food and energy price increases. Core inflation held steady at 2.5%, with services inflation at 3.2%, indicating persistent underlying price pressures. The decline was largely due to falling energy costs and a sharp drop in food prices, including edible fats and oils. Despite the moderation, the European Central Bank remains cautious about rate cuts due to resilient core inflation and geopolitical risks.