German inflation rises more than expected to 2.9% in December

German inflation jumped to a higher-than-expected 2.9% in December, German statistics office Destatis said in the first reading since the country's government was dissolved late last month.

The preliminary Monday print of the country's consumer price index is harmonized across the euro area for comparability. It compares with a 2.6% forecast from analysts polled by Reuters.

The harmonized consumer price index rose by 0.7% on a monthly basis, Destatis said.

December marked the third consecutive month in which German inflation was back above the European Central Bank's 2% target. The indicator fell to 1.8% in September, then jumped back to 2.4% in October and was unchanged at that level in November.

So-called core inflation, which strips out food and energy costs, inched higher to 3.1% in December from 3% in the previous month. Services inflation also nudged higher, coming in at 4.1% compared to the 4% of November, according to the statistics office.

Carsten Brzeski, global head of macro at ING, on Monday said the data indicated "that the summer celebrations over successfully conquering the inflation monster were premature."

Less favorable energy base effects were likely the key driver behind the re-acceleration of German inflation, he noted.

"Looking ahead, the stickiness of inflation at slightly too high a level still looks set to continue as favourable energy base effects will continue to peter out while wages are increasing," Brzeski said.

The latest data comes at a time of political uncertainty in Germany and is one of the last key economic readings before federal elections are held earlier than originally scheduled on Feb. 23.

Germany's now former ruling coalition broke apart in November, when Chancellor Olaf Scholz sacked former Finance Minister Christian Lindner and announced that he would call for early elections.

Since then, the country has been undertaking a series of constitutionally mandated steps to clear the path for polls, including a vote that expressed loss of confidence in Scholz and the official dissolution of Germany's lower house of parliament by President Frank-Walter Steinmeier.