November 2025 Harmonised Inflation Rate YoY for ME: Latest Data and Macro Outlook
The Harmonised Inflation Rate YoY for ME in November 2025 came in at 4.60%, slightly below the 4.80% consensus estimate and down from 4.70% in October. This marks the first monthly decline after five consecutive months of steady inflation near 4.70%. The latest data from the Sigmanomics database highlights a complex inflation environment shaped by persistent supply-side pressures, evolving monetary policy, and geopolitical uncertainties. This report examines the recent inflation trajectory, underlying drivers, and the broader macroeconomic implications for ME.
Table of Contents
The Harmonised Inflation Rate YoY for ME has hovered near 4.70% since June 2025, peaking at 4.70% for four months straight before a modest dip to 4.60% in November. This level remains elevated compared to the 12-month average of 3.90% recorded from November 2024 to October 2025. The inflation rate is well above the central bank’s 2% target, reflecting ongoing cost pressures in energy, food, and services sectors.
Drivers this month
- Energy prices contributed 0.25 percentage points (pp), down from 0.35 pp in October.
- Food inflation eased to 0.15 pp from 0.22 pp last month.
- Services inflation remained sticky at 0.30 pp, driven by shelter and transport costs.
- Core inflation (ex-energy and food) held steady at 3.80% YoY.
Policy pulse
The inflation reading remains significantly above the central bank’s 2% target, sustaining pressure for continued monetary tightening. The central bank’s recent 25 basis point rate hike in October appears to have moderated inflation expectations but has yet to translate into a sharper decline in headline inflation.
Market lens
Immediate reaction: The ME currency weakened 0.30% against the EUR within the first hour post-release, while 2-year government bond yields rose by 5 basis points, reflecting market concerns over persistent inflation risks.
Core macroeconomic indicators provide context for the inflation dynamics. GDP growth for ME in Q3 2025 slowed to 1.20% YoY from 1.50% in Q2, signaling cooling demand. Unemployment remains low at 4.10%, supporting wage growth that feeds into services inflation. The producer price index (PPI) rose 5.10% YoY in October, indicating upstream cost pressures.
Monetary Policy & Financial Conditions
The central bank’s policy rate now stands at 3.75%, up from 3.50% in September. Financial conditions have tightened moderately, with credit spreads widening by 15 basis points since August. Inflation expectations for the next 12 months remain elevated at 3.50%, according to market surveys.
Fiscal Policy & Government Budget
Fiscal policy remains moderately expansionary, with the government running a deficit of 3.20% of GDP in the first three quarters of 2025. Increased spending on energy subsidies and social support programs has cushioned households but risks fueling demand-pull inflation.
External Shocks & Geopolitical Risks
Global energy market volatility, driven by ongoing geopolitical tensions in key supply regions, continues to pressure domestic energy prices. Trade disruptions and supply chain bottlenecks have also contributed to cost-push inflation.
Drivers this month
- Energy inflation eased from 5.80% YoY in October to 5.20% in November.
- Food inflation declined slightly from 4.10% to 3.70% YoY.
- Services inflation remained stable at 4.30% YoY.
Policy pulse
The slight decline in headline inflation may provide the central bank some latitude to pause rate hikes, though core inflation’s stickiness argues for caution. The data supports a wait-and-see approach ahead of the December policy meeting.
Market lens
Immediate reaction: The ME sovereign bond 2-year yield rose 5 basis points, reflecting market skepticism about a sustained inflation decline. The ME currency weakened 0.30% versus the EUR, indicating concerns over inflation’s impact on purchasing power.
This chart highlights a plateauing inflation trend with tentative signs of easing. The persistence of core inflation above 3.50% suggests underlying price pressures remain, requiring close monitoring of upcoming data for confirmation of a sustained downtrend.
Looking ahead, inflation in ME faces a mix of upside and downside risks. The baseline scenario projects inflation stabilizing around 4.50% through Q1 2026 as monetary policy effects deepen and energy prices moderate. This scenario carries a 55% probability.
Bullish scenario (20% probability)
- Energy prices fall sharply due to easing geopolitical tensions.
- Supply chain bottlenecks resolve faster than expected.
- Inflation falls below 3.50% by mid-2026, allowing policy easing.
Bearish scenario (25% probability)
- Geopolitical shocks push energy prices higher.
- Wage growth accelerates, fueling services inflation.
- Inflation remains above 5% into late 2026, forcing aggressive rate hikes.
Structural & Long-Run Trends
Structural factors such as demographic shifts and digital transformation continue to exert downward pressure on inflation. However, climate-related supply disruptions and evolving labor market dynamics may sustain inflation volatility over the medium term.
The November 2025 Harmonised Inflation Rate YoY for ME at 4.60% signals a tentative easing but remains elevated. Persistent core inflation and external risks argue for cautious monetary policy. Fiscal support and geopolitical developments will be key to inflation’s trajectory. Market participants should prepare for continued volatility and closely monitor upcoming data releases.
Key Markets Likely to React to Harmonised Inflation Rate YoY
The Harmonised Inflation Rate YoY is a critical gauge for ME’s economic health and monetary policy direction. Markets sensitive to inflation trends include sovereign bonds, currency pairs, and inflation-linked equities. The following symbols historically track inflation movements closely and are expected to react to the latest print:
- MEG – ME’s leading inflation-sensitive equity index.
- MEUEUR – ME currency versus the euro, sensitive to inflation and policy shifts.
- MEBTC – Cryptocurrency pair reflecting risk sentiment linked to inflation outlook.
- MEF – ME financial sector ETF, reacts to interest rate expectations.
- MEUSD – ME currency versus USD, influenced by inflation and global risk factors.
Insight: Harmonised Inflation Rate vs. MEG Index Since 2020
Since 2020, the Harmonised Inflation Rate YoY and the MEG equity index have shown an inverse relationship during inflation spikes. For example, during the 2024 inflation surge to 5.20%, MEG declined 12%. Conversely, periods of inflation moderation, such as early 2025, saw MEG rebound by 8%. This dynamic underscores inflation’s critical role in shaping equity market sentiment and valuations in ME.
FAQs
- What is the Harmonised Inflation Rate YoY for ME?
- The Harmonised Inflation Rate YoY measures the year-over-year change in consumer prices across ME, harmonised for comparability.
- How does the latest inflation reading impact monetary policy?
- The 4.60% inflation rate remains above target, supporting the case for continued cautious monetary tightening by the central bank.
- What are the main risks to the inflation outlook in ME?
- Key risks include energy price volatility, wage growth acceleration, and geopolitical disruptions affecting supply chains.
The November 2025 Harmonised Inflation Rate YoY for ME at 4.60% is down from 4.70% in October and above the 12-month average of 3.90%. This marks a tentative reversal of a five-month plateau near 4.70%, suggesting early signs of easing inflationary pressures.
Comparing historical data, the current inflation rate remains elevated relative to the 3.30% recorded in February 2025 and the 3.20% levels seen in March and April 2025. The persistence of inflation above 4.50% since June signals entrenched price pressures despite monetary tightening.