German inflation accelerated to 2.9% in December, supporting the ECB's plan to gradually cut interest rates

According to Jinshi Data, Germany's initial annual rate of harmonized CPI rose 2.9% in December, higher than 2.4% last month and the expected 2.6%. Energy and food costs pushed up prices.

German two-year bond yields rose 4 basis points to 2.2% after the data, as traders slightly reduced bets on a rate cut by the European Central Bank. Such data could make a deeper rate cut less likely.

Underlying prices are the key issue, especially in the services sector, where inflation has remained around 4% in the eurozone and Germany's service sector inflation rose from 4% to 4.1% in December.