The November 2025 inflation rate MoM for ME registered a -0.20% decline, marking the second consecutive monthly contraction. This contrasts sharply with the 12-month average MoM inflation of 0.45% since November 2024. The persistent deflationary pressure signals weakening domestic demand amid global uncertainties. Regionally, ME’s inflation trajectory diverges from neighboring economies, where inflation remains positive but moderating.

Drivers this month

• Energy prices fell by 1.50%, contributing -0.08 percentage points (pp) to inflation.
• Food and beverage costs declined by 0.30%, subtracting -0.05 pp.
• Services inflation remained flat, neutralizing any upward pressure.
• Core inflation excluding volatile items dropped by 0.10% MoM.

Policy pulse

The current inflation rate sits well below the central bank’s 2% target, intensifying concerns over deflation risks. The monetary authority has maintained a cautious stance, keeping policy rates steady at 3.25% but signaling readiness to ease if deflation persists. Fiscal stimulus remains limited, with the government prioritizing budget consolidation amid rising debt-to-GDP ratios.

Market lens

Immediate reaction: The ME currency depreciated 0.40% against the EUR within the first hour post-release, while 2-year government bond yields dropped 12 basis points. Breakeven inflation rates for the next 5 years declined by 15 basis points, reflecting diminished inflation expectations.

Core macroeconomic indicators provide essential context for the inflation reading. ME’s GDP growth slowed to 1.10% annualized in Q3 2025, down from 1.80% in Q2. Unemployment edged up to 6.30%, the highest in 18 months. Consumer confidence indices fell to 82, signaling cautious spending behavior. Retail sales contracted 0.50% MoM in October, consistent with the inflation decline.

Monetary policy & financial conditions

The central bank’s neutral stance contrasts with tightening financial conditions. Credit growth slowed to 3.20% YoY, down from 4.50% six months ago. Lending standards tightened, especially for consumer loans. The real policy rate, adjusted for inflation, rose to 1.50%, indicating a mildly restrictive environment despite stable nominal rates.

Fiscal policy & government budget

Fiscal policy remains conservative. The government’s budget deficit narrowed to 2.80% of GDP in Q3, down from 3.50% a year earlier. Public investment projects have slowed, and social spending growth is capped. This fiscal prudence limits demand-side support, potentially prolonging deflationary pressures.

Market lens

Immediate reaction: ME government bond yields fell sharply, with the 2-year yield dropping 12 basis points. The ME currency weakened 0.40% versus the EUR, while inflation-linked securities saw increased selling pressure. These moves reflect heightened concerns about prolonged low inflation and growth risks.

Looking ahead, ME’s inflation trajectory faces several risks and opportunities. We outline three scenarios with assigned probabilities:

• Bullish (25%): Inflation rebounds to 0.30% MoM by Q1 2026, driven by stronger global demand and energy price stabilization. Monetary policy remains on hold, supporting moderate growth.
• Base (50%): Inflation remains subdued, fluctuating between -0.10% and 0.10% MoM through mid-2026. Fiscal restraint and cautious consumer spending limit upward pressure. Central bank signals gradual easing by late 2026.
• Bearish (25%): Deflation deepens, with inflation falling below -0.30% MoM in early 2026 amid renewed external shocks and weaker commodity prices. Monetary easing accelerates, but growth stalls.

External shocks & geopolitical risks

Heightened geopolitical tensions in ME’s key trade corridors threaten supply chains and commodity prices. Any escalation could exacerbate inflation volatility. Conversely, easing tensions or trade agreements could stabilize prices and support inflation normalization.

Structural & long-run trends

Long-term inflation in ME is influenced by demographic shifts, productivity growth, and energy transition policies. Aging populations and automation may suppress wage growth, limiting inflationary pressures. Meanwhile, green energy investments could introduce cost volatility but also new growth avenues.

ME’s November 2025 inflation rate MoM reading of -0.20% signals a challenging environment marked by weak demand and cautious policy. While short-term risks lean toward further softness, structural factors and external developments will shape the medium-term outlook. Policymakers face a delicate balance between supporting growth and maintaining fiscal discipline. Market participants should monitor inflation-linked assets and currency movements closely as signals for policy shifts.

Key Markets Likely to React to Inflation Rate MoM

Inflation readings in ME typically influence bond yields, currency valuations, and equity sectors sensitive to interest rates and consumer demand. The following tradable symbols historically track inflation dynamics closely and are expected to react to the latest data:

• MEG – ME’s leading consumer goods stock, sensitive to inflation-driven spending changes.
• EURMEU – The EUR/ME currency pair, reflecting inflation and monetary policy differentials.
• BTCUSD – Bitcoin, often viewed as an inflation hedge and risk sentiment barometer.
• MEU – ME utilities sector ETF, sensitive to interest rate changes driven by inflation.
• USDMED – USD/ME currency pair, reflecting capital flows amid inflation shifts.

Inflation Rate MoM vs. MEG Stock Price Since 2020

Since 2020, MEG’s stock price has shown a moderate positive correlation (0.52) with ME’s inflation rate MoM. Periods of rising inflation often coincide with stronger consumer demand, boosting MEG’s revenues. Conversely, deflationary episodes, such as the current one, have pressured MEG’s valuation. This relationship underscores MEG’s sensitivity to inflation trends and makes it a useful barometer for market sentiment on consumer inflation.

FAQs

What does the latest ME inflation rate MoM indicate?

The latest reading of -0.20% MoM indicates a contraction in prices, signaling weak demand and potential deflationary risks in ME.

How does this inflation data affect ME’s monetary policy?

The below-target inflation increases the likelihood of monetary easing, as the central bank may lower rates or implement stimulus to support growth.

Why is monitoring inflation rate MoM important for investors?

MoM inflation data provides timely insights into price trends, influencing interest rates, currency values, and equity market sectors sensitive to inflation.

Takeaway: ME’s inflation contraction deepens, raising deflation risks and pressuring policymakers to consider easing. Market watchers should track inflation-linked assets and currency moves closely.

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 11/13/25