SC Inflation Rate YoY: December 2025 Release and Macro Implications
Table of Contents
The latest inflation rate YoY for SC, released on December 5, 2025, registered a mere 0.02%, a steep drop from the 0.30% recorded in October and significantly below the 0.60% consensus forecast. This data, sourced from the Sigmanomics database, highlights a marked deceleration in consumer price growth, reflecting subdued demand and easing cost pressures across key sectors.
Drivers this month
- Shelter costs contributed 0.05 percentage points (pp), down from 0.18 pp last month.
- Energy prices declined, subtracting -0.03 pp from overall inflation.
- Food and beverages inflation remained flat, contributing 0.00 pp.
- Used car prices fell by -0.02 pp, continuing a downward trend.
Policy pulse
The 0.02% inflation rate sits well below the central bank’s 2% target, reinforcing the case for a cautious monetary stance. The central bank’s recent rate hikes appear to be tempering inflationary pressures, but the risk of slipping into deflationary territory is rising.
Market lens
Immediate reaction: The SCR currency weakened 0.30% against the USD within the first hour post-release, while 2-year government bond yields fell by 5 basis points, reflecting expectations of prolonged accommodative monetary policy.
Examining core macroeconomic indicators alongside inflation reveals a complex picture. GDP growth slowed to an annualized 1.10% in Q3 2025, down from 1.80% in Q2, consistent with the cooling inflation trend. Unemployment edged up slightly to 5.40%, indicating slack in the labor market. Wage growth moderated to 2.00% YoY, reducing upward pressure on prices.
Monetary Policy & Financial Conditions
The central bank has raised its policy rate by 75 basis points since mid-2025, aiming to anchor inflation expectations. Financial conditions tightened, with credit growth slowing to 3.20% YoY from 4.50% six months ago. Lending rates rose, dampening consumer and business borrowing.
Fiscal Policy & Government Budget
Fiscal policy remains prudent, with the government maintaining a balanced budget target. Public spending growth slowed to 1.50% YoY, and tax revenues have been stable. No major stimulus measures are planned in the near term, limiting fiscal inflationary impulses.
This chart confirms a clear downward trajectory in inflation, reversing the mid-year acceleration. The trend suggests that inflationary pressures are abating, but the risk of deflation remains if demand fails to recover.
Market lens
Immediate reaction: Following the print, the SCR/USD exchange rate depreciated 0.30%, while 2-year bond yields declined, signaling market expectations for prolonged low rates. Inflation breakeven rates also adjusted downward by 10 basis points.
Looking ahead, inflation in SC faces a range of possible trajectories. The baseline scenario (60% probability) projects inflation stabilizing near 0.10% in early 2026 as monetary tightening effects persist but global demand recovers modestly. The bullish scenario (20%) assumes a rebound to 0.50%+ inflation driven by stronger commodity prices and fiscal stimulus. The bearish scenario (20%) foresees deflation risks if global growth slows sharply and domestic demand weakens further.
External Shocks & Geopolitical Risks
Geopolitical tensions in key trading partners could disrupt supply chains, pushing prices higher. Conversely, easing trade frictions or commodity price declines could further suppress inflation.
Structural & Long-Run Trends
Long-term inflation in SC remains subdued due to demographic shifts, productivity gains, and digitalization. These factors exert downward pressure on prices, complicating the central bank’s inflation targeting efforts.
The December 2025 inflation print for SC, at 0.02%, signals a significant cooling of price pressures. While this aligns with tighter monetary policy and cautious fiscal management, it raises concerns about potential deflation. Policymakers must balance supporting growth without reigniting inflation. Financial markets have priced in prolonged low rates, but volatility remains amid external uncertainties. Close monitoring of inflation drivers and flexible policy responses will be crucial in navigating the evolving macroeconomic landscape.
Key Markets Likely to React to Inflation Rate YoY
Inflation readings in SC typically influence currency strength, bond yields, and equity valuations. The following tradable symbols historically track or react to inflation shifts, offering insights into market sentiment and risk appetite.
- USDSCR – The USD/SC currency pair often moves inversely to inflation surprises, reflecting monetary policy expectations.
- SCBANK – SC’s banking sector is sensitive to inflation and interest rate changes, impacting loan growth and credit risk.
- SCRETAIL – Retail stocks respond to consumer price pressures and spending power fluctuations.
- SCBTC – Cryptocurrency markets in SC show volatility around inflation data, reflecting risk-on/risk-off shifts.
- EURSCR – The Euro/SC pair reacts to inflation differentials and cross-border capital flows.
Inflation Rate YoY vs. USDSCR Since 2020
Since 2020, SC’s inflation rate YoY and the USDSCR exchange rate have exhibited a strong inverse correlation (correlation coefficient approx. -0.68). Periods of rising inflation coincide with SCR appreciation, reflecting tightening monetary policy expectations. Conversely, inflation dips often precede SCR weakening as markets price in looser policy. This dynamic underscores the importance of inflation data in shaping currency market trends.
FAQs
- What does the latest SC Inflation Rate YoY indicate?
- The 0.02% inflation rate indicates very subdued price growth, suggesting weak demand and easing cost pressures in SC’s economy.
- How does this inflation reading affect monetary policy in SC?
- The low inflation supports a cautious or potentially easing monetary policy stance to avoid deflation risks while balancing growth objectives.
- Why is monitoring Inflation Rate YoY important for investors?
- Inflation impacts interest rates, currency values, and asset prices, making it a key indicator for investment decisions and risk management.
Final Takeaway
SC’s near-zero inflation reading signals a pivotal moment for policymakers, balancing disinflation risks against growth support amid evolving global uncertainties.
Sources
- Sigmanomics database, Inflation Rate YoY for SC, December 5, 2025 release.
- SC Central Bank Monetary Policy Reports, Q3 2025.
- SC Government Fiscal Budget Statements, 2025.
- International Energy Agency, Commodity Price Reports, 2025.
- World Bank Economic Indicators, 2025.
USDSCR – Key currency pair reflecting inflation-driven monetary policy expectations.
SCBANK – SC banking sector stocks sensitive to inflation and interest rate changes.
SCRETAIL – Retail sector equities impacted by consumer price fluctuations.
SCBTC – Cryptocurrency market volatility linked to inflation data releases.
EURSCR – Euro/SC exchange rate influenced by inflation differentials.
The December 2025 inflation rate of 0.02% contrasts sharply with October’s 0.30% and the 12-month average of 0.44%. This steep decline signals a pronounced easing in price pressures after a brief mid-year peak of 0.64% in August.
Monthly inflation rates have trended downward since August, reflecting weaker demand and falling commodity prices. The chart below illustrates this reversal, highlighting the volatility in energy and shelter components as key drivers.