BERLIN, May 29 (Xinhua) -- German inflation slowed in May after two consecutive months of sharp increases driven by the Middle East war, official data showed on Friday, with the help from a temporary government fuel tax cut aimed at easing energy-driven price pressures.
Consumer prices rose 2.6 percent year-on-year, down from 2.9 percent in April, according to preliminary figures from the Federal Statistics Office.
Energy prices were still up 6.6 percent year-on-year in May, but that marked a significant slowdown from April's 10.1-percent surge.
Economists attributed much of the pullback to Berlin's two-month fuel tax relief scheme, which took effect on May 1 and cuts petrol and diesel taxes by roughly 17 euro cents (0.2 U.S. dollar) per liter. Germany's central bank, the Bundesbank, has estimated the measure will lower inflation by around 0.25 percentage points in both May and June.
But analysts cautioned that the easing may be temporary. Elmar Voelker, expert at the Landesbank Baden-Wuerttemberg (LBBW), said that the fuel subsidy's effect on inflation would fade, once the measure expires in July, unless the government extends the scheme.
"The inflation specter is unlikely to be banished so quickly," Voelker said, cautioning that the Middle East war could continue to feed broader price pressures beyond the energy sector, particularly through food costs.
According to government estimates, the fuel tax cut will result in around 1.6 billion euros (1.87 billion U.S. dollars) in lost revenue.
German Transport Minister Patrick Schnieder told German business daily Handelsblatt in an interview on Thursday that the government's capacity to maintain such support was limited.
"The state will eventually reach the limits of what it can do," said Schnieder, adding that rising transport costs would ultimately push up prices for food and everyday consumer goods.
According to projections released this week by the German Council of Economic Experts, inflation is expected to average 3 percent in 2026 and 2.8 percent in 2027, compared with 2.2 percent in 2025, as higher energy prices and geopolitical uncertainty continue to weigh on the outlook. ■