Inflation 2024 & Forecast 2025: How Expensive It Really Is

Inflation in 2024 has a firm grip on Germany and the rest of Europe. Soaring prices for energy, food, and consumer goods are putting pressure on both consumers and businesses alike. Purchasing power is eroding while the cost of living climbs to record-breaking levels.

But how did we get here — and what lies ahead in 2025? In this article, we dive into the key causes of inflation in Europe in 2024, analyze its impact across different social groups, and look at expert forecasts for 2025. Who should brace for further price hikes, and is there hope for relief? These questions concern millions — and here, you’ll find comprehensive and well-founded answers.

Causes of Inflation 2024 in Europe

The 2024 inflation surge is the result of multiple overlapping factors that have triggered a widespread price explosion. One major driver is the high cost of energy, fueled by geopolitical tensions and reduced gas deliveries from Russia. This energy crisis has raised production costs across nearly all industries — directly pushing up consumer prices.

Additionally, disrupted supply chains and raw material shortages have driven up the cost of many goods. The global economy continues to suffer the aftershocks of the pandemic, which caused manufacturing backlogs and significantly higher transport costs. Industries like electronics, construction, and automotive are especially affected, with material shortages making their products more expensive.

A further key factor is the expansive monetary policy of central banks. In an effort to support the economy during the pandemic, massive amounts of liquidity were injected into the markets — leading to a higher money supply and, consequently, rising prices. This demand-driven inflation is further reinforced by rising wages, intended to offset the increased cost of living, but which simultaneously increase production costs and thus fuel prices even more.

Impact of Inflation 2024 on European Consumers and Businesses

The effects of inflation in 2024 are being felt across the board — but low-income households are bearing the brunt. These households spend a larger portion of their budget on essentials such as food, energy, and rent. As living costs rise, purchasing power declines, curbing consumer spending and slowing economic momentum.

Businesses, on the other hand, face soaring production costs. Retailers are forced to pass these price hikes on to customers, which weakens demand. Meanwhile, payroll expenses are rising in tandem.

Forecasts for Inflation in 2025

Economic forecasts suggest that while inflation may ease slightly in 2025, it will remain at elevated levels. Experts expect energy prices to stabilize — but not fall — meaning heating and electricity bills will stay high.

Key insights from leading forecasts:

Food prices will continue to rise, albeit more moderately than in 2024: According to the Bundesbank and the IFO Institute, food prices in 2025 are expected to increase at a slower pace, but still remain significantly above historical averages.
Rents and utility costs will remain high: Forecasts from Deutsche Bank and the Federal Statistical Office indicate that rent and additional housing costs will likely stay elevated in major cities and metropolitan areas.
Wages may increase further — which could fuel inflation: According to projections from PwC and the German Institute for Economic Research (DIW), wages are expected to rise as a countermeasure to real wage losses. However, this could also lead to price increases, as companies pass on higher labor costs to consumers.
Interest rate hikes by the European Central Bank (ECB) may lead to higher borrowing costs, which could suppress investment and consumption: ECB forecasts and banking analyses suggest that interest rate hikes may continue into 2025 to curb inflation. This, however, could lead to higher loan costs, especially affecting large purchases like real estate or durable consumer goods.

These findings underline that 2025 will likely be marked by economic complexity, with inflation slightly cooling, yet cost-of-living pressures remaining persistent.

Strategies for Navigating Inflation in 2024 and 2025

Given the inflationary environment in 2024 and the outlook for 2025, the pressing question is: How can consumers and businesses protect their purchasing power and assets?

Are tangible assets always the better choice?

A key solution lies in adapting investment strategies. Tangible assets like real estate and precious metals are traditionally viewed as inflation-resistant, since they don’t lose value like cash or fixed-income assets. Real estate also offers the benefit of rental income and potential appreciation. Gold and other precious metals have historically served as a safe haven in times of crisis.

Downside: Flexibility and broad diversification can be limited, as high capital and a certain level of expertise are required.

High Tangible Asset Yields & Inflation Protection for Everyone

This is where fractional ownership emerges as an innovative investment model. Platforms like ours enable investors to acquire shares of high-quality tangible assets without having to pay the full purchase price. This allows individuals to invest in fine art, rare collectibles, and other valuable assets — and benefit from their appreciation without taking on the risk of a single large investment.

Fractional ownership also makes broad diversification possible. Investors can mix different asset classes and strategically align their portfolio with inflation trends. This modern investment approach offers not just protection from purchasing power loss, but also attractive return potential during inflationary periods.

Conclusion: Inflation 2024 and the Outlook for 2025

Inflation in 2024 has significantly shifted the economic balance and poses major challenges for both consumers and businesses. And while forecasts for 2025 hint at a slight decline, inflation is still expected to remain high.

In light of these ongoing developments, strategic financial planning is more important than ever. Investing in crisis-resilient asset classes, ensuring broad diversification, and managing costs efficiently will be critical to long-term success.