German inflation soared to a two-year high of 2.7% in March as a result of surging oil prices due to the war in Iran, the Federal Statistical Office said on Monday.

The preliminary figures showed inflation climbing from 1.9% in February to the highest level since the 2.9% recorded in January 2024.

The 2.7% inflation rate is above the 2% target set by both the German Bundesbank and the European Central Bank for price growth.

Energy prices were the main driver of the rising rate of inflation, accelerating by 7.2% compared to March 2025.

Services were 3.2% higher, while food prices rose 0.9%, the data showed.

Month on month, prices rose 1.1% in total, the Wiesbaden-based agency said.

"The rise in inflation in March is only the beginning," said Jörg Krämer, chief economist at Commerzbank. "Higher energy costs will eat their way through the supply chains in the coming months, unless the war ends quickly."