German Wholesale Price Inflation Hits 3-Year High

German wholesale inflation hit a three-year high of 6.3 percent in April as energy prices and the cost of raw materials climbed in the wake of the Iran war and closure of the Strait of Hormuz, official government data showed on May 13.

That spike was in contrast with just 1.2 percent in February, before the outbreak of the conflict.

“The price increase registered in April 2026 was largely attributable to the conflict in Iran and the Middle East, which resulted in higher wholesale prices of energy products and raw materials, in particular,” the Federal Statistical Office said.

It also stated that wholesale prices in April 2026 were up 2 percent from the month before.

German government bond yields also hovered around 15-year highs on May 13, as markets expected the European Central Bank to raise rates by 75 basis points by year-end.

German headline inflation accelerated to 2.9 percent in April, also adding to the headaches plaguing the European Union’s largest economy.

Companies are likely to pass on higher energy costs to customers, at least in part, said Felix Schmidt, an economist at Berenberg.

“This will increase inflationary pressure, and the inflation rate is expected to jump above the 3 [percent] mark in May,” he said. “We are currently forecasting an inflation rate of around 3.2 percent.”

German Chancellor Friedrich Merz’s government has already sought to cushion Germans from rising prices by introducing a measure for employers to provide workers a voluntary tax-free relief bonus of up to 1,000 euros ($1,177), but the proposal ran into regional opposition from states.

Earlier this month, Merz said that Europe and the United States have the shared goal of stopping Iran from obtaining nuclear weapons and that Europe wants to maintain the NATO alliance.

“We are really willing to keep this alliance alive for the future,” Merz ​said at a press conference on May 9 alongside Swedish Prime Minister Ulf Kristersson.

“We know that there are some differences. We know that we are seeing challenges, all of us, but our final goal is to bring this conflict to an end and to guarantee that ​Iran is not able to produce nuclear weapons. And this goal is a common goal between ​America and Europe.”

Merz made the comments amid ongoing tensions between the United States and European NATO partners over the future of the defense alliance, and in the wake of European allies’ reluctance to lend support to the U.S.–Israeli war against Iran.

The news of the rise in inflation comes after Berlin’s economic ministry cut its growth forecasts ​in half for 2026 and 2027 amid the Iran war.

“The economic recovery expected for this year will once again be slowed down by external geopolitical shocks,” German Economy Minister Katherina Reiche said in an April 22 post on Facebook presenting Germany’s spring forecast.

The government expects 0.5 percent growth for 2026, down from an earlier projection of 1 percent, and cut its 2027 growth outlook to 0.9 percent from 1.3 percent.

The Federal Ministry for Economic Affairs and Climate Action noted that the conflict in the Middle East, with the closure of the Strait of Hormuz, has “especially” led to shortages and a rise in the price of energy and other commodities, affecting companies and private households in Germany.

The economic turmoil caused by the Iran war builds further pressure on a German economy that was already struggling with energy costs after cutting itself off from Russian gas because of the war in Ukraine.

After two years of contraction in 2023 and 2024 and stagnation in 2025, Germany’s world-renowned auto industry has been badly hit, including by fierce competition from cheaper Chinese electric vehicles.

Reuters, Victoria Friedman, and Owen Evans contributed to this report.