FX.co ★ Eurozone Inflation Falls Below ECB Target

In December 2025, consumer price inflation in the Eurozone decreased to 1.9%, down from November's 2.1% and slightly below the preliminary estimate of 2.0%. This marks the first instance since May that inflation has fallen under the European Central Bank's target of 2%, suggesting that interest rates are likely to be maintained without change for a more extended period. Within specific sectors, services inflation eased to 3.4% from 3.5%, while inflation in non-energy industrial goods decreased to 0.4% from 0.5%. Energy prices saw a more significant drop, falling 1.9% year-on-year compared to a 0.5% decline in the prior month. Conversely, the inflation rate for food, alcohol, and tobacco rose marginally to 2.5% from 2.4%. Core inflation, which excludes volatile categories such as energy, food, alcohol, and tobacco, decreased to 2.3%, reaching its lowest point in four months. Among major economies in the euro area, harmonized inflation slowed in Germany (2.0% down from 2.6%), France (0.7% down from 0.8%), and Spain (3.0% down from 3.2%). Italy, however, saw a slight increase in its HICP inflation, rising to 1.2% from 1.1%.