By Don Nico Forbes
German inflation fell in the last month of 2025, tracking a decline in French consumer prices and reinforcing the European Central Bank’s view that the eurozone remains in a “good place.”
German consumer prices were up 2.0% in December on year, compared with a 2.6% rise in the previous month, EU-harmonized figures published by statistics agency by Destatis showed Tuesday.
In France, harmonized inflation fell to 0.7% from 0.8% in November, according to statistics agency Insee.
“The bar for ECB officials to change their policy stance currently appears quite high and December’s inflation figures will probably confirm their view that rates are in a good place,” Franziska Palmas, senior Europe economist at Capital Economics, said.
Still, a weakening labor market could cause services inflation to fall below the central bank’s forecasts later this year, which could prompt rate cuts toward the latter end of 2026, Palmas said.
The ECB held the deposit rate at 2% at a meeting on Dec. 18, where it has been since June. President Christine Lagarde reiterated then that central bank policy remains in a “good place,” while raising the ECB’s growth expectations for the eurozone to 1.4% in 2025 and 1.2% this year.
The central bank expects eurozone headline inflation to fall to 1.9% this year from 2.1% in 2025, below its target of 2%.
Flash inflation estimates for the eurozone as a whole will be released on Wednesday.
Write to Don Nico Forbes at don.forbes@wsj.com
(END) Dow Jones Newswires
01-06-26 0918ET