Finance
German inflation rises more than expected; labour market, retail sales weak
Published by Global Banking & Finance Review®
Posted on November 28, 2025
3 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 28, 2025
3 min readLast updated: January 20, 2026
German inflation rose to 2.6% in November, with unemployment and retail sales showing weakness. The economy faces slow recovery.
By Maria Martinez
BERLIN (Reuters) -German inflation accelerated more than expected in November, reaching the highest level since February, while the number of people out of work rose and retail sales fell.
The mixed signals come as Germany experiences a sluggish recovery after two years of contraction. The economy is expected to grow by only 0.2% in 2025 as Chancellor Friedrich Merz's spending measures need time to translate into better conditions.
Inflation in the euro zone's largest economy rose to 2.6% year-on-year in November, preliminary data from the federal statistics office showed on Friday. Analysts polled by Reuters had forecast EU-harmonised inflation nudging up to 2.4% from last month's 2.3%.
Germany's core inflation rate, which excludes volatile food and energy prices, fell to 2.7% from 2.8% in the previous month.The German data comes ahead of the euro zone inflation release on Tuesday.
Inflation in the bloc is expected at 2.1% in November, unchanged from the previous month, according to economists polled by Reuters.
The European Central Bank left interest rates unchanged at 2% in October and repeated that policy was in a "good place" as economic risks recede.
UNEMPLOYMENT EDGES UP IN NOVEMBER
The number of people out of work in Germany rose by fewer than expected in November, but labour demand continued to slow, underscoring a persistent lack of momentum in the job market.
In seasonally adjusted terms, the jobless figure rose by 1,000 to 2.973 million, labour office figures showed on Friday, while analysts and economists had predicted an increase by 5,000 in a Reuters poll.
"The feared worsening of the labour market that emerged after the number of unemployed reached the symbolic 3-million mark in August has so far been avoided," said Carsten Brzeski, global head of macro at ING.
The seasonally adjusted jobless rate was unchanged from 6.3% a month earlier.
Labour office head Andrea Nahles said the number of people in employment was stagnating and demand for labour remained subdued.
There were 624,000 job openings in November, 44,000 fewer than a year ago.
"Companies are still facing major economic challenges and this continues to be reflected in the labour market," German Labour Minister Baerbel Bas said.
Companies in Germany have grown more restrictive in their personnel planning, a survey by the Ifo institute showed on Wednesday, with the employment barometer falling to its lowest level in more than five years.
The German Labour Office expects unemployment to rise to more than 3 million at the beginning of next year.
RETAIL SALES REMAIN WEAK AHEAD OF CHRISTMAS
Retail sales fell by 0.3% on the month, data from the statistics office showed, compared to a 0.2% increase forecast in a Reuters poll.
The data remain consistent with a sharp slowdown in retail sales growth through 2025, following strong gains at the end of 2024 and into this year, said Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics.
A survey by the Ifo institute showed that around one-in-four companies in the retail sector anticipated business would be poor this Christmas season.
($1 = 0.8633 euros)
(Additional reporting by Friederike Heine in Berlin, Bernadette Hogg and Tristan Veyet in Gdansk, Editing by Miranda Murray, Alex Richardson and Conor Humphries)
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured as an annual percentage increase.
Unemployment refers to the situation when individuals who are capable of working are unable to find a job. It is often expressed as a percentage of the total workforce.
Retail sales measure the total receipts of retail stores. It is an important economic indicator that reflects consumer spending trends.
Core inflation is a measure of the long-term trend in prices, excluding items that face volatile price movement, such as food and energy.
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