The Consumer Confidence Index (CCI) for ES dropped to 78.70 in December 2025, below the estimate of 81.00 and the previous month’s 81.50. This marks a 3.50-point MoM decline and a 5.50-point drop from the 12-month average of 84.20. The geographic scope covers the entire ES economy, reflecting household sentiment across urban and rural regions. Temporally, the data captures consumer sentiment as of early December, a critical period ahead of the holiday season and year-end fiscal adjustments.

Drivers this month

• Rising inflation pressures weighed on purchasing power, contributing -1.20 points.
• Labor market concerns, despite low unemployment, subtracted 0.80 points.
• Energy price volatility added uncertainty, reducing confidence by 0.60 points.

Policy pulse

The reading sits below the central bank’s comfort zone, signaling potential headwinds for consumer spending. Inflation remains above target at 3.10% YoY, prompting cautious monetary policy stances.

Market lens

Immediate reaction: The ES currency weakened 0.30% against the USD within the first hour post-release, while 2-year government bond yields edged up 5 basis points, reflecting increased risk premiums.

Consumer Confidence is a leading indicator for consumption, which accounts for roughly 60% of ES GDP. The December reading of 78.70 contrasts with the peak of 85.00 recorded in February 2025, highlighting a downward trend over the past 10 months. Core macroeconomic indicators such as retail sales growth slowed to 1.20% YoY in November, and industrial production contracted by 0.40% MoM, reinforcing the cautious consumer mood.

Monetary Policy & Financial Conditions

The ES central bank has maintained a restrictive stance, with the policy rate steady at 4.50%. Financial conditions tightened as credit spreads widened by 15 basis points in November, and mortgage rates rose to 5.20%, dampening housing market enthusiasm and consumer borrowing capacity.

Fiscal Policy & Government Budget

Fiscal stimulus remains limited amid efforts to reduce the government deficit, which stands at 3.80% of GDP. Recent tax adjustments have slightly increased disposable income but have not offset inflationary pressures fully.

Drivers this month

• Inflation-adjusted income erosion (-1.20 points)
• Energy price uncertainty (-0.60 points)
• Labor market concerns despite stable unemployment (-0.80 points)

Market lens

Immediate reaction: ES equity futures dropped 0.40% following the print, reflecting investor caution. The implied volatility on consumer discretionary stocks increased by 12%, signaling heightened uncertainty about near-term earnings.

Looking ahead, the Consumer Confidence trajectory will be shaped by several factors. Inflation is expected to moderate slightly to 2.80% by mid-2026, which could ease pressure on real incomes. However, geopolitical risks, including ongoing trade tensions and energy supply uncertainties, pose downside risks.

Bullish scenario (20% probability)

• Inflation falls faster than expected, boosting real incomes.
• Labor market strengthens, reducing unemployment below 5%.
• Fiscal stimulus increases, supporting disposable income.
• Consumer Confidence rebounds above 85 by Q2 2026.

Base scenario (55% probability)

• Inflation moderates gradually, stabilizing real incomes.
• Labor market remains stable with modest job growth.
• Fiscal policy remains neutral.
• Consumer Confidence hovers around 78-80 through mid-2026.

Bearish scenario (25% probability)

• Inflation remains sticky above 3%, eroding purchasing power.
• Geopolitical shocks disrupt energy markets, raising costs.
• Labor market weakens, unemployment rises above 6%.
• Consumer Confidence falls below 75, risking recession.

In summary, the December 2025 Consumer Confidence reading for ES signals a cautious consumer base facing inflationary and geopolitical headwinds. The decline from recent months and below the 12-month average suggests consumption growth may slow, impacting GDP forecasts. Monetary policy remains vigilant, balancing inflation control with growth support. Fiscal policy constraints limit near-term stimulus, while external shocks add uncertainty. Market reactions underscore sensitivity to consumer sentiment shifts. Structural trends, including demographic shifts and digital transformation, continue to reshape consumption patterns over the long run.

Investors and policymakers should monitor upcoming inflation data, labor market reports, and geopolitical developments closely. The balance of risks points to a cautious but not dire outlook, with potential for recovery if inflation eases and fiscal support increases.

Key data source: Sigmanomics database, incorporating official ES government releases and proprietary survey data. Methodology includes seasonally adjusted indices and cross-verified inflation and labor statistics.