Europe’s Largest Economy Faces Rising Inflation and Unemployment Concerns

Rising unemployment and inflation are clouding Germany’s economic outlook, Europe’s largest economy, as it braces for the impact of new U.S. tariffs. August inflation rose 2.1%, exceeding expectations, while core inflation remained 2.7%. Unemployment climbed to 3.025 million (6.4%). The eurozone-wide inflation reading will further indicate tariff effects. Germany’s export-driven economy shows slow growth, with GDP expanding 0.3% then contracting 0.3%. Analysts suggest US tariffs may push prices higher globally, though domestic cooling in the labor market could ease wage and inflationary pressures. The rise in inflation weakens the case for an ECB rate cut in September.