Inflation in the eurozone slowed to 2% y/y in December

Energy prices slowed down the pace of inflation, while services remain the main driver of inflation

Annual inflation in the eurozone fell to 2.0% in December 2025 from 2.1% in November, according to preliminary estimates by Eurostat. The indicator returned to a level close to the ECB’s target, which may intensify discussions on further monetary policy in 2026.

The highest price growth rates in the inflation structure continue to be recorded in the services sector – 3.4% y/y, although the figure has declined slightly compared to November (3.5%). Food, alcohol, and tobacco, on the contrary, accelerated their growth to 2.6% from 2.4% a month earlier. At the same time, inflation for non-energy industrial goods slowed to 0.4%.

The energy component remained the key factor in the overall slowdown. Energy prices fell by 1.9% year-on-year in December, which is significantly deeper than in November (-0.5%). This reflects the stabilization of gas and electricity markets in the EU at the end of the year.

Inflation dynamics varied significantly between euro area countries. The highest annual rates were recorded in Austria (+3.9%), Slovakia (+4.1%), and Croatia (+3.8%), while inflation in France was only +0.7% and in Italy +1.2%. In Germany, consumer prices rose by 2.0%.

According to preliminary data, in the third quarter of 2025, the GDP of the European Union grew by 0.3% compared to the previous quarter, while in the eurozone it grew by 0.2% quarter-on-quarter. In annual terms, the EU economy grew by 1.5% and the eurozone economy by 1.3%. Sweden, Portugal, and the Czech Republic led the recovery.