The German economy remains stagnant, with its GDP recording no change in the third quarter of 2025, according to the Federal Statistical Office (Destatis). This development reflects the continued inability of Europe’s “locomotive” to recover.

Demand for German goods remains low as US tariffs and structural problems in the auto and chemical industries limit exports, Deutsche Welle notes.

An economic recovery is not expected before 2026, however. Economists predict a meager 0.2 percent growth for 2025, although massive government investment of billions in infrastructure, such as roads and rail networks, and also in defense, is foreseen.

At the same time, the Friedrich Merz government is under pressure to make reforms that will boost competitiveness and cut red tape. Economy and Energy Minister Katerina Reiche stressed the need for reforms in the social security, labour market and taxation, and promised that “the government will continue to work to achieve these goals.”

“Unsustainable recovery without reforms”

Commerzbank’s chief economist Jörg Kremer seems pessimistic, recently stating that the German economy has yet to take off, adding that the recovery the government is planning “will not be sustainable without substantial reforms.”

On the inflation front, a mild deflation is being registered. The crucial consumer price index retreated to 2.3% in October, down from 2.4% in September, with structural inflation (excluding food and energy prices) holding at 2.8%. Germany’s leading economic institutes expect inflation for the whole of 2025 to be 2.1%. Note that the ECB’s target is 2%.

Accurate coffee and meat

German consumers, however, are still struggling in their daily lives due to acriticism, with food prices remaining 37% higher than before the pandemic. Specifically, there has been a 7.2% average increase in food prices since September, according to the Federal Bureau of Statistics.

Compared to September 2024,coffee increased by nearly 40%, beef by 33.3% and chicken by 29%.

Olive oil fell significantly by 22.6% and sugar by 28.8%. The same goes for butter, whose price fell to its lowest level in two years: a 250-gram package costs €1.39. The decrease is attributed to increased milk production and limited demand.

The price of €1.39 per litre is now €1.39.

At the same time, energy prices also moved down, with gas costing 11.2% less and electricity 6.3% cheaper than last year.

Despite this small reprieve, food overall remains more expensive than in 2020, while wages have not increased significantly in the same period.