Inflation picks up in December from November

Latest reading: Harmonized consumer prices were up 2.4% in annual terms in December, following a 2.1% increase in the prior month. The reading marked the third consecutive acceleration in inflation and was above the euro area average for the first time since August. Relative to the previous month's figures, there were higher price pressures for recreation (+1.3% in annual terms vs +0.8% in November) and restaurants and hotels (+5.9% vs +3.9% in November). In contrast, price pressures reduced for transportation in December (+0.7% vs +1.8% in November). Finally, the variations in food and non-alcoholic beverages and housing and utilities were the same as in the prior month (+3.5% and +1.5%, respectively). Meanwhile, consumer prices increased 2.2% in December, stable from the previous month's reading. Lastly, harmonized consumer prices fell 0.04% in December in month-on-month terms, following a 0.85% fall in the previous month.

Panelist insight: EIU analysts commented on the inflation outlook: “We expect inflation to converge to the 2% target of the European Central Bank (ECB) in 2026 from an estimated 2.2% in 2025 and 2.7% in 2024. Lower energy and industrial goods prices, together with a slight slowdown in services inflation, should help to anchor inflation expectations, despite tight labour markets and solid domestic demand holding back the pace of disinflation.” ING’s Ruben Dewitte said: “On the pricing side, inflation eased early in 2025, reaching 1.9% year-on-year in March, but this trend reversed as prices for unprocessed food rose. While these upward pressures should ease this year, persistent labour market tightness is expected to keep services inflation elevated. Overall, we expect inflation to […] moderate slightly to 2.1% in 2026.

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