German inflation eased more than expected in November due to lower energy prices, data from the federal statistics office showed today.

The inflation rate fell to 2.3% in November. Analysts polled by Reuters had expected inflation to ease to 2.6%.

German consumer prices, harmonised to compare with other European Union countries, had risen by 3% year-on-year in October.

It is likely that headline inflation will rise again temporarily to around 4% in December due to a base effect, said Timo Wollmershaeuser, head of forecasts at Ifo.

This is because gas prices in the consumer price index fell sharply as the government covered December bills in 2022.

"But the inflation rate will fall to below 3% as early as the beginning of next year," Wollmershaeuser said.

Core inflation, which excludes volatile food and energy prices, fell to 3.8% in November from 4.3% the previous month.

Economists pay close attention to German inflation data, as Germany is one of the euro zone countries which publishes its figures one day before the euro zone inflation data release.

The annual rate of inflation here fell to 2.3% in November from 3.6% in October, the latest "flash estimate" from the Central Statistics Office showed today, while Spain's harmonised inflation also fell to 3.2% from 3.5% in the previous month.

Euro zone inflation is expected to ease to 2.7% in November from 2.9% in October, according to economists polled by Reuters.

"Inflation looks to be benign in the euro zone with weak demand and supply-side pressures remaining mild," ING's senior economist Bert Colijn said.

For the European Central Bank, this confirms the view that next year could bring about a first rate cut, Colijn said.

"With inflation trending down better than expected, this could happen earlier than expected," he added.

Earlier, figures also showed that inflation eased in November in Germany's most populous state of North Rhine-Westphalia. The inflation rate in North Rhine-Westphalia slowed to 3% in November from 3.1% in October.

Inflation also fell in Bavaria to 2.8% in November from 3.7% the previous month, in Hesse to 2.9% from 3.6%, and in Baden Wuerttemberg to 3.4% from 4.4%.