Sharecast - According to the Federal Office of Statistics, in seasonally adjusted terms the country's Consumer Price Index dropped at a month-on-month pace of 1.2% in December.
That brought the year-on-year rate of increase down to 9.6%.
Economists at Barclays (LON:BARC) Research had forecast a rise of 0.2% on the month and 11.1% in annual terms.
In non-harmonised terms, CPI was off by 0.8% on the month and ahead by 8.6% on the year.
The Federal Office of Statistics attributed the decline in CPI, among other things, to the government's immediate assistance programme, which covered the monthly installment for gas and heat.
However, the exact effect of the government package could not yet be quantified, it said.
Regional CPI estimates published earlier had already pointed to a sharp decline in the country-level figures.
Nonetheless, Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, noted that the details of those reports had indicated that core inflation, as opposed to headline CPI, had in fact increased slightly.
"Assuming this is reflected in the national data, it will be the key data point for the ECB, at least as it pertains to policy moves in early 2023," he said.
"The decline in the headline is welcome, but to the extent that it is driven by fiscal subsidies, it will be seen as a net-demand boost. This, in turn, points to stronger underlying pressure on core inflation."