Eurozone consumer price inflation eased to 1.9% in December 2025, down from 2.1% in November and slightly under the preliminary estimate of 2.0%. It marked the first time since May that inflation has come in below the European Central Bank’s 2% target, reinforcing expectations that interest rates will remain on hold for an extended period. Services inflation moderated to 3.4% from 3.5%, while price growth for non-energy industrial goods softened to 0.4% from 0.5%. Energy prices fell more sharply, declining 1.9% year-on-year compared with a 0.5% drop in November. By contrast, inflation in food, alcohol, and tobacco edged higher to 2.5% from 2.4%. Core inflation, excluding energy, food, alcohol, and tobacco, slipped to 2.3%, its lowest level in four months. Among the euro area’s largest economies, harmonized inflation cooled in Germany (2.0% vs. 2.6%), France (0.7% vs. 0.8%), and Spain (3.0% vs. 3.2%). Italy was the exception, with HICP inflation ticking up modestly to 1.2% from 1.1%.
