Eurozone inflation fell to 2.0% in December 2025. It was 2.1% in November.
Eurozone inflation matters because the European Central Bank aims for 2% inflation over the medium term. That target is symmetric. ([European Central Bank][2])
What the flash estimate showed
Eurozone inflation hit the ECB target, but the mix was uneven. Energy prices fell harder. Services prices stayed sticky. ([European Commission][1])
Eurostat’s breakdown for December 2025 showed:
Services: 3.4%, down from 3.5% in November
Food, alcohol & tobacco: 2.6%, up from 2.4%
Non-energy industrial goods: 0.4%, down from 0.5%
Energy: -1.9%, down from -0.5% ([European Commission][1])
A key “underlying” measure also eased. Eurozone inflation excluding food and energy was 2.4% in December, by Eurostat’s table. Reuters also reported a core gauge at 2.3%, based on a broader exclusion set. ([European Commission][1])
Eurozone inflation also rose 0.2% month on month, in the flash data. ([European Commission][1])
Why Eurozone inflation returned to 2%
Energy did much of the work. Eurozone inflation got a boost from negative energy prints. The energy component moved from -0.5% to -1.9%. ([European Commission][1])
Goods inflation stayed very low. Non-energy industrial goods were just 0.4% year on year. That is close to flat. ([European Commission][1])
Services remained the problem area. Eurozone inflation in services was still 3.4%. That is well above target. ([European Commission][1])
What it means for the ECB in 2026
The ECB’s goal is clear. It targets 2% inflation over the medium term. It also stresses symmetry around that goal. ([European Central Bank][2])
Eurozone inflation at target lowers pressure for more tightening. Still, services inflation can keep the ECB cautious. Policymakers watch services because it links to wages. ([Financial Times][3])
Reuters said markets were pricing a long hold. It reported investors expected unchanged rates at all eight ECB meetings in 2026. ([Reuters][4])
That view rests on a simple idea. Eurozone inflation may dip below 2%, but that could be temporary. Reuters said the outlook looked “balanced” at the ECB’s horizon. ([Reuters][4])
Market impact to watch
Eurozone inflation at 2% can move rates, FX, and bank pricing. Moves can be small, but still important.
Bond markets react fast to inflation surprises. The Financial Times noted bond yields moved as investors adjusted policy expectations after the data. ([Financial Times][3])
For the euro, the logic is mixed. A lower inflation path can weaken the currency. But a steady ECB can support it. The net effect often depends on U.S. rates.
Banks also watch this print. Loan rates track swap curves. Mortgage pricing can follow.
What comes next in the data
This was a flash estimate. Eurostat said the full December 2025 HICP release is due on January 19, 2026. ([European Commission][1])
Revisions can happen. They are usually small. Still, traders will watch the final.
Eurostat also flagged HICP method changes from February 4, 2026. It will update the COICOP classification and the index base year. That does not change today’s story. It can affect future comparisons. ([European Commission][1])
Why this print matters beyond one month
Eurozone inflation hitting 2% helps reset the narrative. It suggests the post-shock surge is fading. It also gives the ECB more room to focus on growth risks.
Yet the mix still matters. Eurozone inflation can sit at 2% while services stay hot. That mix can delay easier policy.
For investors, the message is practical. Watch services. Watch wages. Watch energy swings.