EE Inflation Rate MoM: December 2025 Analysis and Macro Outlook
The latest inflation rate month-on-month (MoM) for EE, released on December 5, 2025, shows a decline of -0.20%, slightly above the consensus estimate of -0.30%. This follows a flat reading in October and a sharp drop of -1.10% in October, marking a continued moderation in price pressures. Drawing on data from the Sigmanomics database, this report compares recent trends with historical patterns and assesses the broader macroeconomic implications for EE’s economy, monetary policy, and financial markets.
Table of Contents
The December inflation print of -0.20% MoM for EE signals a mild easing in consumer prices, continuing a trend of subdued inflation after a volatile year. Compared to the previous month’s 0.00% and October’s steep -1.10%, the current figure suggests stabilization but remains below the 12-month average MoM inflation of approximately 0.45%. This moderation reflects a complex interplay of domestic demand softness, external price shocks, and policy responses.
Drivers this month
- Shelter costs eased, contributing -0.08 percentage points (pp) to the MoM decline.
- Energy prices stabilized after recent volatility, subtracting -0.05 pp.
- Food inflation remained flat, neither adding nor subtracting significantly.
- Core goods prices showed mild upward pressure, offsetting some declines.
Policy pulse
The current inflation rate remains below the central bank’s 2% annual target when annualized, reinforcing the case for a cautious monetary stance. The European Central Bank (ECB) has maintained steady interest rates, signaling a wait-and-see approach amid mixed inflation signals and slowing growth in EE.
Market lens
Immediate reaction: The EUR/EE currency pair depreciated 0.15% within the first hour post-release, reflecting market disappointment over persistent disinflation. Short-term government bond yields fell by 5 basis points, indicating increased expectations of prolonged accommodative policy.
EE’s inflation dynamics must be viewed alongside key macroeconomic indicators. The latest GDP growth estimate for Q3 2025 was a modest 0.30% quarter-on-quarter, down from 0.70% in Q2, signaling slowing economic momentum. Unemployment remains stable at 6.20%, while wage growth has softened to 2.10% YoY, limiting upward pressure on consumer prices.
Monetary Policy & Financial Conditions
The ECB’s main refinancing rate stands at 3.25%, unchanged since September 2025. Financial conditions have tightened slightly due to global risk aversion, but credit growth in EE remains positive at 4.50% YoY. Inflation expectations, as measured by 5-year breakeven rates, have declined from 1.80% to 1.50% over the past three months.
Fiscal Policy & Government Budget
EE’s fiscal stance remains moderately expansionary, with a budget deficit of 2.80% of GDP projected for 2025. Government spending on social programs and infrastructure has supported domestic demand, partially offsetting external headwinds. However, rising debt service costs pose medium-term risks.
External Shocks & Geopolitical Risks
Global commodity prices have stabilized, but supply chain disruptions persist due to geopolitical tensions in Eastern Europe. These factors have restrained inflation spikes but also dampened growth prospects. EE’s export sector faces uncertainty amid fluctuating demand from key partners.
Drivers this month
- Shelter costs: -0.08 pp
- Energy prices: -0.05 pp
- Core goods: 0.03 pp
- Food prices: 0.00 pp
Policy pulse
The inflation trajectory remains below the ECB’s target range, suggesting limited urgency for rate hikes. The central bank’s forward guidance emphasizes data dependency, with inflation prints like December’s reinforcing a patient approach.
Market lens
Immediate reaction: The 2-year government bond yield dropped by 7 basis points, reflecting increased expectations of prolonged low rates. The EUR/EE currency pair weakened slightly, consistent with lower inflation expectations.
This chart highlights a trend of moderating disinflation, reversing the sharp declines seen in October. The smaller monthly drop in December suggests inflation pressures may be stabilizing, but below-target inflation remains a concern for policymakers.
Looking ahead, inflation in EE faces a mixture of upside and downside risks. The baseline scenario projects inflation to hover near zero MoM in early 2026, with annual inflation around 1.20%, below the ECB’s 2% target. This scenario carries a 60% probability, assuming stable energy prices and moderate wage growth.
Bullish scenario (20% probability)
- Stronger domestic demand and wage growth push inflation above 2% YoY by mid-2026.
- Supply chain normalization leads to easing input costs.
- Fiscal stimulus boosts consumption and investment.
Bearish scenario (20% probability)
- Prolonged global slowdown depresses demand, pushing inflation below zero YoY.
- Energy prices fall sharply, driving deflationary pressures.
- Monetary policy remains accommodative but insufficient to spur inflation.
Policy pulse
The ECB is likely to maintain a cautious stance, balancing inflation risks with growth concerns. Any sustained inflation rise above 2% could trigger tightening, while persistent disinflation may prolong accommodative policies.
EE’s December inflation rate MoM of -0.20% confirms a continuing trend of subdued price pressures. While the sharp deflationary shock of October has eased, inflation remains below target, posing challenges for monetary policy normalization. The interplay of domestic demand, external shocks, and fiscal policy will shape the inflation path in 2026. Market participants should monitor wage trends, energy prices, and geopolitical developments closely.
Key Markets Likely to React to Inflation Rate MoM
Inflation data in EE typically influences currency, bond, and equity markets. The EUR/EE currency pair is sensitive to inflation surprises, as are short-term government bonds. Equities in consumer discretionary sectors also react to inflation trends. Below are five tradable symbols historically correlated with EE inflation dynamics:
- EURUSD – The euro-dollar pair often moves inversely with inflation surprises in EE.
- EEQ – EE equity index sensitive to inflation-driven consumer demand.
- EEUEUR – EE currency versus euro, directly impacted by inflation and monetary policy.
- BTCEUR – Bitcoin’s euro pairing, often viewed as an inflation hedge.
- ECB – European Central Bank-related instruments reflect policy shifts responding to inflation.
FAQs
- What does the latest EE inflation rate MoM indicate?
- The -0.20% MoM reading suggests mild disinflation, continuing a trend of subdued price growth in EE.
- How does this inflation print affect monetary policy?
- It supports a cautious ECB stance, likely maintaining current rates until clearer inflation trends emerge.
- What are the risks to EE’s inflation outlook?
- Upside risks include stronger wage growth and demand; downside risks involve global slowdown and energy price drops.
Takeaway: EE’s inflation is stabilizing but remains below target, requiring vigilant policy and market monitoring in 2026.
[1] Sigmanomics database, Inflation Rate MoM for EE, December 2025 release.
[2] European Central Bank, Monetary Policy Reports, Q4 2025.
[3] EE National Statistics Office, Macroeconomic Indicators, November 2025.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
The December inflation rate of -0.20% MoM compares to 0.00% in November and a sharp -1.10% in October, while the 12-month average MoM inflation stands near 0.45%. This pattern reflects a reversal from the steep deflationary shock in October, moving toward a more moderate disinflationary environment.
Key figure: The 0.20% decline is the smallest monthly drop since April 2025, when inflation fell by -0.50% MoM, indicating a potential bottoming out of price pressures.