German investor confidence rose more than expected in December, a closely watched survey showed Tuesday, as hopes grow that surging energy prices are coming down and record-high inflation is nearing its zenith.

The ZEW institute's economic expectations index jumped by 13.4 points to minus 23.3 points, the third consecutive increase after months of decline.

Analysts surveyed by Factset had forecast a smaller boost in morale, predicting a reading of minus 29 points.

"The vast majority of financial market experts expect the inflation rate to decline in the coming months," ZEW president Achim Wambach said in a statement.

"Together with the temporary stabilisation on the energy markets, this leads to a significant improvement in the economic outlook." Germany's inflation rate eased to 10 percent in November, after hitting a record-high of 10.4 percent the month before.

The surprise drop came on the back of slightly lower energy prices, although they remain far higher than in previous years as a result of Russia's war in Ukraine.

The German government has unveiled a 200-billion-euro ($210-billion) support package to mitigate the impact of the energy crisis, including a cap on gas prices for businesses and households.

The government nevertheless expects Europe's biggest economy to contract by 0.4 percent in 2023.