FX.co ★ Eurozone Inflation Eases to ECB Target

Consumer price inflation in the Euro area decreased to 2.0% in December 2025, a slight drop from 2.1% in November, based on preliminary estimates. This rate, the lowest since August, aligns with the European Central Bank's (ECB) mid-range target and strengthens the belief that interest rates will likely remain unchanged for the time being. The deceleration in inflation was attributed to a slight reduction in price growth for services, which moved from 3.5% in November to 3.4%, and non-energy industrial goods, which saw a decrease from 0.5% to 0.4%. Additionally, there was a more pronounced decline in energy costs, which fell by 1.9% compared to a 0.5% fall previously. On the other hand, prices for food, alcohol, and tobacco saw a slight increase, accelerating to 2.6% from 2.4%. Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, decreased to 2.3%, the lowest in four months, slightly below the anticipated 2.4%. Among the major European economies, the Harmonized Index of Consumer Prices (HICP) rates declined in Germany, where it decreased from 2.6% to 2.0%, and in France, where it went down from 0.8% to 0.7%. Similarly, Spain experienced a reduction from 3.2% to 3.0%. Conversely, Italy saw a slight increase in harmonized inflation, rising to 1.2% from 1.1%.