Key Takeaways: EU headline CPI for January 2026 printed at 100.05, down from December’s 100.63. This marks the second consecutive monthly decline, with the 12-month average at 129.47. Market reaction was muted as the reading undershot consensus estimates.
EU CPI Slides Again in January, Undershooting Forecasts
Table of Contents
Big-Picture Snapshot
- January 2026 CPI: 100.05
- December 2025 CPI: 100.63
- 12-month average: 129.47
- Consensus estimate: 100.10
- MoM change: -0.58%
- YoY comparison: Not directly comparable due to rebasing in February 2026
Drivers This Month
- Energy: -0.21pp
- Food: -0.10pp
- Shelter: +0.07pp
- Transport: -0.05pp
Policy Pulse
The CPI reading remains below the European Central Bank’s 2% inflation target, reflecting ongoing disinflationary pressures.Market Lens
Markets showed little immediate movement as the CPI print came in below both the previous month and consensus. Investors appear to be waiting for more clarity on the underlying trend before repositioning.Foundational Indicators
- October 2025: 129.42
- November 2025: 129.70
- December 2025: 129.34
- January 2026: 129.56 (pre-rebase)
- February 2026: 100.05 (post-rebase)
Drivers This Month
- Lower energy prices continued to weigh on the headline figure.
- Food prices eased, contributing to the overall decline.
- Shelter costs provided a modest offset.
Policy Pulse
The CPI’s sub-target reading gives the ECB room to maintain its current policy stance, with no immediate pressure to tighten.Market Lens
Bond yields held steady after the release, reflecting market confidence in the ECB’s approach and the absence of inflationary surprises.
What This Chart Tells Us: The chart highlights a technical step-down in the CPI series due to rebasing, not a collapse in prices. The underlying trend remains stable, with the latest monthly decrease reflecting continued disinflation rather than a structural shift.
Forward Outlook
- Bullish scenario (25–35%): Energy prices rebound, CPI stabilizes above 100.30 in coming months.
- Base scenario (50–60%): CPI hovers near current levels, with minor monthly fluctuations as disinflation persists.
- Bearish scenario (10–20%): Further declines in energy and food push CPI below 99.80, raising deflation concerns.
Drivers This Month
- Energy and food remain the primary swing factors for near-term CPI direction.
- Shelter and services inflation show resilience but lack momentum.
Policy Pulse
The ECB’s 2% target remains distant, with headline inflation readings consistently below threshold since late 2025.Market Lens
Equities traded sideways as investors digested the technical rebasing and lack of inflationary pressure, focusing instead on upcoming growth data.Closing Thoughts
Drivers This Month
- Technical rebasing in February 2026 reset the index to 100.00, complicating direct historical comparisons.
- Underlying disinflation trends remain intact.
Policy Pulse
With CPI below target, the ECB faces little urgency to adjust rates, though vigilance remains warranted.Market Lens
Currency markets were largely unmoved by the release, as the data confirmed the prevailing disinflation narrative.Key Markets Reacting to CPI
The EU CPI release typically influences a range of asset classes, from equities and bonds to currencies and select commodities. This month’s below-consensus print and the technical rebasing muted immediate volatility, but several key markets remain sensitive to inflation trends.
Since 2020, periods of rising EU CPI have coincided with euro weakness, particularly in 2022. The relationship remains complex, but CPI surprises continue to drive short-term EURUSD volatility.
- AAPL: European inflation trends can affect global tech valuations through interest rate expectations and consumer demand.
- EURUSD: The euro’s value often reacts to CPI surprises, reflecting shifts in ECB policy outlook.
- BTCUSD: Bitcoin’s narrative as an inflation hedge draws attention during periods of CPI volatility.
| Year | CPI (avg) | EURUSD (avg) |
|---|---|---|
| 2020 | 105.7 | 1.14 |
| 2021 | 110.2 | 1.18 |
| 2022 | 117.9 | 1.05 |
| 2023 | 123.4 | 1.08 |
| 2024 | 127.1 | 1.09 |
| 2025 | 129.5 | 1.07 |
FAQ
- What is the main takeaway from EU CPI Slides Again in January, Undershooting Forecasts?
- EU CPI for January 2026 fell to 100.05, marking a second consecutive monthly decline and coming in below consensus estimates.
- How does this summary help understand the EU inflation outlook?
- The summary highlights the technical rebasing, ongoing disinflation, and muted market reaction, providing context for the latest CPI data.
- What is the focus keyword for this report?
- CPI
EU CPI’s January reading confirms a disinflationary trend, with technical rebasing complicating direct historical comparisons.
Updated 2/25/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
Updated 2/25/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
- [1] Sigmanomics Economic Database, EU CPI, accessed 2/25/26.
- [2] European Central Bank, Harmonised Index of Consumer Prices methodology, accessed 2/25/26.
- [3] Eurostat, CPI historical series, accessed 2/25/26.
Chart Dynamics
January’s CPI of 100.05 fell from December’s 100.63, marking a second straight monthly drop. The 12-month average stands at 129.47, with the latest reading well below this trend. Since October 2025, the index has moved from 129.42 to 100.05, reflecting the statistical rebasing implemented in February 2026.Compared to November’s 129.70, the index has declined by over 22% due to the base year adjustment, not underlying price changes. The MoM decrease from December’s 100.63 to January’s 100.05 is a 0.58% drop, the sharpest since the rebasing.