EU Consumer Price Index: December 2025 Print Signals Tepid Inflation Momentum
The European Union’s Consumer Price Index (CPI) for December 2025, released January 19, 2026, offers a nuanced view of inflation dynamics as the bloc enters the new year. This report dissects the latest figures, historical context, and macroeconomic implications, drawing on the Sigmanomics database and market reactions.
Table of Contents
Big-Picture Snapshot
Drivers this month
December 2025’s EU CPI came in at 129.54, up just 0.20% from November’s 129.33, and narrowly missing the consensus estimate of 129.56[1]. The reading marks a continuation of the subdued inflation trend seen since late summer. Key contributors this month included:
- Energy prices: Flat, as oil and gas stabilized after Q3 volatility.
- Food: Mild uptick, but below seasonal averages.
- Shelter: Contributed 0.07 percentage points (pp) to the headline figure.
Policy pulse
With the European Central Bank’s (ECB) medium-term inflation target at 2%, December’s annualized CPI growth remains below target, reinforcing expectations for a cautious monetary stance. The ECB’s December meeting minutes highlighted concern over persistent disinflationary pressures, especially in core goods and services.
Market lens
Immediate reaction: EUR/USD dipped 0.20% in the first hour after the print, reflecting market disappointment at the softer-than-expected reading. Eurozone 2-year yields fell 3 basis points, while breakeven inflation rates nudged lower, signaling a modest dovish repricing.
Foundational Indicators
Historical context
December’s 129.54 CPI print follows a November reading of 129.33 and October’s 129.42. The 12-month average stands at 129.45, placing December slightly above trend but well within the year’s narrow range. For comparison:
- September 2025: 129.32
- August 2025: 129.31
- December 2024: 128.90 (YoY: 0.50%)
Inflation momentum has decelerated since the spring, with monthly gains averaging just 0.10% since August. The annualized pace remains muted, reflecting both external and domestic headwinds.
Fiscal stance
Fiscal policy remains mildly expansionary, with several EU governments extending energy subsidies and targeted support. However, budget deficits are projected to narrow in 2026, limiting further fiscal impulse.
External shocks & risks
Geopolitical risks—especially in Eastern Europe and the Middle East—continue to pose upside risks to energy and food prices. However, supply chain normalization and easing shipping costs have offset some of these pressures in recent months.
Chart Dynamics
Market lens
Immediate reaction: EUR/USD dipped 0.20% and Eurozone 2-year yields fell 3bp, as markets interpreted the print as slightly dovish. Breakeven inflation rates edged down, and European equities (e.g., DAX) saw a modest uptick, reflecting hopes for a less restrictive ECB stance.
Forward Outlook
Scenario analysis
- Bullish (20%): Energy prices rebound, wage growth accelerates, and CPI climbs above 130.00 by March 2026. ECB delays rate cuts.
- Base case (65%): CPI remains range-bound (129.30–129.70) through Q1 2026. ECB signals patience, with first rate cut in late Q2.
- Bearish (15%): Disinflation persists, CPI dips below 129.30, and growth concerns prompt earlier policy easing.
Risks and catalysts
Upside risks include renewed energy shocks, supply disruptions, or fiscal slippage. Downside risks stem from weak consumer demand, global slowdown, or rapid normalization in goods prices. The balance of risks remains tilted toward a prolonged period of low inflation.
Structural trends
Long-run drivers—such as digitalization, aging demographics, and green transition investments—continue to exert downward pressure on core inflation, even as cyclical factors ebb and flow.
Closing Thoughts
Summary
December 2025’s EU CPI print at 129.54 underscores the bloc’s ongoing struggle to generate sustained inflation. With the index barely above its 12-month average and market reaction muted, the ECB faces a delicate balancing act. The next few months will be critical in determining whether inflation can re-anchor near target or if disinflationary forces will dominate into 2026.
Key Markets Likely to React to CPI
Movements in the EU CPI often ripple through currency, equity, and crypto markets. The following symbols are historically sensitive to EU inflation surprises, reflecting their exposure to monetary policy, consumer demand, and risk sentiment shifts:
- DAX – Germany’s blue-chip index, highly correlated with EU growth and inflation outlooks.
- EURUSD – The euro-dollar pair, a direct barometer of ECB policy expectations.
- EURGBP – Tracks relative inflation and policy divergence between the EU and UK.
- ETHEUR – Ethereum priced in euros, sensitive to EU macro and risk appetite shifts.
- BTCUSD – Bitcoin vs. USD, often moves on global inflation and liquidity signals.
| Year | EU CPI YoY (%) | DAX YoY (%) |
|---|---|---|
| 2020 | 0.30 | 3.50 |
| 2021 | 2.60 | 15.80 |
| 2022 | 8.40 | −12.30 |
| 2023 | 5.70 | 16.10 |
| 2024 | 1.20 | 8.70 |
| 2025 | 0.50 | 2.20 |
While DAX returns are not perfectly correlated with CPI, periods of rising inflation often coincide with increased volatility and sector rotation. The subdued CPI in 2025 aligns with modest DAX gains and a defensive market tone.
FAQ
Q: What does the December 2025 EU CPI reading signal for the ECB?
A: The 129.54 print suggests inflation remains below target, supporting a patient ECB stance and delaying rate cuts.
Q: How did markets react to the latest EU CPI release?
A: EUR/USD dipped 0.20%, 2-year yields fell, and equities edged higher, reflecting dovish policy expectations.
Q: What are the main risks to the EU inflation outlook?
A: Upside risks include energy shocks and fiscal slippage; downside risks stem from weak demand and global disinflation.
Bottom line: EU inflation remains subdued, keeping policy and markets in a holding pattern as 2026 begins.
- Sigmanomics database, EU CPI time series, release 2026-01-19.
- ECB monetary policy statements, December 2025.
- Eurostat, EU CPI historical data, 2024–2025.
December’s CPI (129.54) is up from November’s 129.33, and slightly above the 12-month average of 129.45. The chart below illustrates a stable, low-volatility trend since August, with only minor monthly fluctuations. The largest monthly gain in the past six months was October’s 0.28-point rise, while the smallest was September’s near-flat reading.
Compared to the same period last year (December 2024: 128.90), the index is up just 0.50% year-on-year, underscoring the persistent lack of inflationary momentum. The rolling three-month average (129.41) further highlights the absence of any breakout in price pressures.