Germany’s inflation surges to 2.4% as it narrowly skirts a technical recession

Germany’s inflation surged to 2.4% in October, back above the European Central Bank’s 2% target, even as the country narrowly avoided a technical recession in the third quarter.

The preliminary print, announced by German statistics office Destatis, is harmonized across the euro area for comparability.

Analysts polled by Reuters had been expecting harmonized inflation to come in at 2.1% in October.

Harmonized inflation had dropped to 1.8% in September, after coming in at the European Central Bank’s 2% target in August.

So-called core inflation, which strips out more volatile food and energy costs, came in at 2.9% in October, the German statistics office said Wednesday, an increase from the 2.7% reading of September.

Services inflation also nudged higher to 4% in October, from 3.8% in the previous month.

The data comes after Destatis earlier on Wednesday posted a preliminary reading of Germany’s gross domestic product, which grew 0.2% in the third quarter compared to the previous three months.

The increase surprised analysts polled by Reuters who had anticipated a 0.1% decline, allowing Germany to narrowly avoid a technical recession — which is marked by two consecutive quarters of contraction.

Destatis also revised down the second-quarter GDP figures to a 0.3% contraction, from a previously reported 0.1% dip.