A person rides a bike on a road under blooming cherry trees in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery.(Xinhua/Zhang Haofu)

BERLIN, April 29 (Xinhua) -- Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery.

Preliminary figures from the Federal Statistical Office (Destatis) showed Germany's inflation rate rose to 2.9 percent in April from 2.7 percent in March, as surging energy prices fed into broader consumer costs. The increase marks a clear shift from the roughly 2-percent level seen in recent months.

Energy prices jumped 10.1 percent year-on-year in April, the sharpest increase since February 2023, Destatis said.

Fuel costs have risen steadily since tensions in the Middle East escalated in late February, disrupting shipping through the Strait of Hormuz. Energy prices had already climbed 7.2 percent in March, marking their first increase since late 2023.

"Inflation rose in April only because of higher energy prices," said Joerg Kraemer, chief economist at Commerzbank. "But surveys show that companies will move quickly to pass on rising energy costs, and will soon raise prices for other goods and services."

A survey published Wednesday by the Munich-based ifo Institute showed a growing number of German firms plan significant price increases. Its price expectations index rose to 31.6 points in April from 25.5 in March, the highest level since January 2023.

Price increases are expected across manufacturing, hospitality and retail, particularly in energy-intensive sectors, ifo said. In the chemicals industry, price expectations nearly doubled from 31.8 points to 61.7.

"The war is taking its toll on the German economy. Companies are increasingly passing on rising energy costs to consumers," said Timo Wollmershaeuser, head of surveys at ifo.

Economists warn the impact could extend beyond inflation and weigh on broader economic activity.

"The geopolitical escalation is hitting the German economy at a moment when a dynamic recovery had only just begun," said Geraldine Dany-Knedlik of the German Institute for Economic Research (DIW). Rising energy prices and heightened uncertainty are likely to delay a meaningful rebound, she added.

The German government has already described the recovery as fragile and last week cut its 2026 growth forecast by half to 0.5 percent, citing higher energy costs and geopolitical risks.

To mitigate the impact, Berlin plans to cut fuel taxes by around 17 euro cents (0.2 U.S. dollars) per liter from May 1 to June 30, a measure expected to cost about 1.6 billion euros (1.87 billion dollars) in lost revenue. The oil industry has pledged to pass the reduction on to consumers, though some analysts doubt it will be fully reflected in prices.

Critics have also questioned whether the fuel rebate will primarily benefit oil companies rather than significantly ease pressure on households, while only supporting drivers of combustion-engine vehicles.

However, analysts say the current inflation wave is likely to be less severe than the shock triggered by the Russia-Ukraine conflict in 2022.

A simulation by the German Economic Institute (IW) suggests inflation could reach around 3.5 percent in 2026, well below the peak of about 10 percent during that crisis. The institute expects consumer prices in December 2026 to be 4.6 percent higher than a year earlier.

Germany's economy ministry said the recovery outlook will largely depend on how the Middle East conflict evolves and remains subject to "considerable uncertainty." Should tensions ease, increased government spending on infrastructure and defense could help lift the economy out of its prolonged downturn. ■

A tram travels in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery. (Xinhua/Zhang Haofu)

People jog in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery.(Xinhua/Zhang Haofu)

People walk on a pedestrian bridge in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery.(Xinhua/Zhang Haofu)

A train departs from Bornholmer Street station in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery. (Xinhua/Zhang Haofu)

Trains are pictured near Bornholmer Street station in Berlin, Germany, April 30, 2026. Escalating conflict in the Middle East is driving up living costs in Germany, with official data released Wednesday pointing to renewed inflationary pressure in Europe's largest economy and raising concerns over its fragile recovery.(Xinhua/Zhang Haofu)