Germany's Inflation Rises to 2.9% as Clothing Prices Edge Up

German Inflation Edges Up to 2.9% in August

Consumer prices in Germany rose by 2.9% year-on-year in August 2026, according to the Federal Statistical Office (Destatis), up slightly from 2.8% in July. Higher energy costs were the main factor behind the increase, with motor fuel prices climbing 27.7% compared with a year earlier. The national consumer price index (CPI) provides the headline figure for Europe’s largest economy.

Clothing and Footwear Prices

Within the CPI basket, clothing and footwear prices increased by 0.4% year-on-year in August, following a 1.0% decline in July. This narrowed the gap between clothing inflation and overall inflation from 3.8 percentage points in July to 2.5 percentage points in August.

Breaking down the category: clothing prices edged up 0.1% year-on-year, while footwear rose 1.8%. Menswear prices fell 0.2% and womenswear dropped 0.3%. Children’s clothing increased 1.8%, and clothing accessories climbed 2.3%. On the Harmonised Index of Consumer Prices (HICP), the measure used for European comparisons, clothing and footwear rose 0.3% year-on-year.

Retail Sales: Clothing Outperforms the Wider Market

Preliminary unadjusted data from Destatis show that real turnover at clothing retailers rose 1.3% year-on-year in August, following a 1.7% increase in July. Nominal turnover at clothing stores also rose 1.3%. In contrast, shoe and leather goods retailers saw real turnover fall 1.4% year-on-year – a reminder that footwear is struggling even as clothing holds up.

The wider retail sector painted a weaker picture. Real turnover across all retail fell 0.6% year-on-year on the same unadjusted basis. On Destatis’s adjusted press-release figures, total retail volume rose 1.3% in real terms from July, part-recovering a revised 3.2% drop in July. On that same adjusted basis, non-food retail fell 0.8% year-on-year in real terms, while online and mail-order retail rose 3.5%.

Consumer and Business Sentiment Improve

The European Commission’s consumer confidence indicator for Germany improved to minus 12.7 in August from minus 13.7 in July. The Nuremberg-based market research institute NIM reported its GfK Consumer Climate at minus 26.8 points heading into September, revised from an initial minus 26.6 and up from minus 29.4 heading into August. NIM attributed the improvement mainly to higher income expectations, though willingness to buy remained virtually unchanged.

The Munich-based ifo Institute’s business climate index rose to 88.8 points in August from 86.7 in July, with ifo noting that retailers were more satisfied with current business conditions. Germany’s unemployment rate held steady at 4.0% for a third month, according to Eurostat. The Federal Employment Agency (Bundesagentur für Arbeit) counted 3,061,400 registered unemployed in August, 36,260 more than a year earlier.

ECB Holds Rates as Euro Strengthens

The European Central Bank left its deposit facility rate unchanged at 2.25% in August. The euro strengthened 1.54% against the US dollar over the month, with a monthly average of 1.1593 dollars versus 1.1417 dollars in July, according to the ECB. Compared with August 2025, the euro was 0.33% weaker, leaving landed costs for dollar-invoiced sourcing broadly in line with a year earlier.

The Bottom Line

August’s data show clothing and footwear prices rising more slowly than headline inflation – 0.4% against 2.9% on the national CPI. Preliminary unadjusted Destatis data show real turnover at clothing retailers up 1.3% year-on-year, against a 0.6% decline for retail overall on the same basis, while shoe retailers lost ground. Sentiment improved among consumers and businesses, but NIM reported that willingness to buy was virtually unchanged heading into September.

Note: this article combines the most recent official data available at the time of writing. Reporting lags differ by indicator and country, so not all figures refer to the same month. Each data point is labelled with its reference period.