Euro Area Annual Inflation Rises to 2.2%: Insights from Euro Indicators

Pre-announcement: upcoming changes to the HICP As of 4 February 2026, several methodological changes will take effect in the HICP. The index will be compiled according to the new European Classification of Individual Consumption According to Purpose version 2aligned with the A COICOP 2018 classification. Games of chance will be included in the HICP as part of Recreation services under the division of Recreation, sport and culture. The index reference period will also be updated to 2025=100.

Overview

Euro area annual inflation is expected to be 2.2% in November 2025, up from 2.1% in October according to a flash estimate from Eurostat, the statistical office of the European Union.

Looking at the main components of euro area inflation, services is expected to have the highest annual rate in November (3.5%, compared with 3.4% in October), followed by food, alcohol & tobacco (2.5%, stable compared with October), non-energy industrial goods (0.6%, stable compared with October) and energy (-0.5%, compared with -0.9% in October).

Tables

Euro area annual inflation and its components (%)
	Weights (‰)	Annual rate							Monthly rate
	2025	Nov 24	Jun 25	Jul 25	Aug 25	Sept 25	Oct 25	Nov 25	Nov 25
All-items HICP	1000.0	2.2	2.0	2.0	2.0	2.2	2.1	2.2e	-0.3e
All-items excluding: energy	906.0	2.7	2.5	2.5	2.5	2.5	2.4	2.4e	-0.4e
energy, unprocessed food	863.4	2.7	2.4	2.4	2.3	2.4	2.4	2.4e	-0.4e
energy, food, alcohol & tobacco	712.8	2.7	2.3	2.3	2.3	2.4	2.4	2.4e	-0.5e
Food, alcohol & tobacco	193.3	2.7	3.1	3.3	3.2	3.0	2.5	2.5e	0.2e
processed food, alcohol & tobacco	150.6	2.8	2.6	2.7	2.6	2.6	2.3	2.3e	0.1e
unprocessed food	42.7	2.3	4.6	5.4	5.5	4.7	3.2	3.3e	0.4e
Energy	94.0	-2.0	-2.6	-2.4	-2.0	-0.4	-0.9	-0.5e	0.9e
Non-energy industrial goods	256.3	0.6	0.5	0.8	0.8	0.8	0.6	0.6e	-0.1e
Services	456.5	3.9	3.3	3.2	3.1	3.2	3.4	3.5e	-0.8e
are estimated Source dataset: prc_hicp_manr and prc_hicp_mmor

Inflation rates (%) measured by the HICP
	Annual rate							Monthly rate
	Nov 24	Jun 25	Jul 25	Aug 25	Sept 25	Oct 25	Nov 25	Nov 25
Belgium	4.8	2.9	2.6	2.6	2.7	2.5	2.6e	0.3e
Germany	2.4	2.0	1.8	2.1	2.4	2.3	2.6e	-0.5e
Estonia	3.8	5.2	5.6	6.2	5.3	4.5	4.7e	-0.5e
Ireland	0.5	1.6	1.6	1.9	2.7	2.8	3.2e	-0.2e
Greece	3.0	3.6	3.7	3.1	1.8	1.6	2.9e	0.0e
Spain	2.4	2.3	2.7	2.7	3.0	3.2	3.1e	0.0e
France	1.7	0.9	0.9	0.8	1.1	0.8	0.8e	-0.2e
Croatia	4.0	4.4	4.5	4.6	4.6	4.0	4.3e	0.3e
Italy	1.5	1.8	1.7	1.6	1.8	1.3	1.1e	-0.2e
Cyprus	2.2	0.5	0.1	0.0	0.0	0.2	0.2e	-1.0e
Latvia	2.3	3.9	3.9	4.2	4.2	4.3	3.8e	-0.3e
Lithuania	1.1	3.2	3.4	3.6	3.7	3.7	3.6e	0.4e
Luxembourg	1.1	2.4	2.6	2.8	3.1	3.0	3.6e	0.1e
Malta	2.1	2.5	2.5	2.7	2.4	2.5	2.4e	-3.3e
Netherlands	3.8	2.8	2.5	2.4	3.0	3.0	2.6e	-1.4e
Austria	1.9	3.2	3.7	4.1	3.9	4.0	4.1e	0.3e
Portugal	2.7	2.1	2.5	2.5	1.9	2.0	2.1e	-0.9e
Slovenia	1.6	2.5	2.9	3.0	2.7	3.1	2.4e	0.0e
Slovakia	3.6	4.6	4.6	4.4	4.6	3.9	3.8e	0.2e
Finland	1.7	1.9	1.9	2.2	2.2	1.4	1.4e	-0.2e
are estimated Source dataset: prc_hicp_manr and prc_hicp_mmor

Notes for users

Revisions and timetable

The euro area inflation flash estimate is issued at the end of each reference month.

The complete set of harmonised indices of consumer prices (HICP) for the euro area, EU and Member States is released around the middle of the month following the reference month.

The next release with full data for November 2025 is scheduled for 17 December 2025.

Methods and definitions

Annual inflation is the price change of consumer goods and services between the current month and the same month of the previous year. Monthly inflation is the price change between the current month and the previous month.

Geographical information

The euro area consists of Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

The euro area data refer to the country composition at a specific point in time. Changes in the composition of the euro area are incorporated using a chain index formula.

For more information

How does the difference between headline and core inflation impact the assessment of the Euro Area’s economic health?

Headline Inflation vs.Core Inflation: Understanding the Nuances

The Euro Area’s annual inflation rate climbed to 2.2% in December 2025, according to the latest data released by Eurostat. While this figure represents a shift from previous months, a deeper dive into the Euro Indicators reveals a more complex picture.It’s crucial to differentiate between headline inflation – the total inflation rate – and core inflation,which excludes volatile items like energy and food.

* Headline Inflation (2.2%): Reflects the overall price increases consumers experience.

* Core Inflation (estimated 2.8%): Provides a clearer view of underlying inflationary pressures, stripping out temporary fluctuations. This suggests inflation is becoming more entrenched.

* energy Prices: A significant contributor to the recent increase, driven by geopolitical factors and increased demand.

* Food Prices: While moderating slightly,food inflation remains elevated,impacting household budgets.

Understanding this distinction is vital for both policymakers and investors when assessing the economic outlook and potential monetary policy responses.

Key Euro Indicators Driving Inflation

Several key Euro Indicators are signaling persistent inflationary pressures. These indicators provide a granular view of the economic forces at play.

1. Purchasing Managers’ Index (PMI): The latest PMI data indicates continued, albeit slowing, growth in the services sector. Strong demand in services frequently enough translates to wage pressures and ultimately, higher prices.
2. Wage Growth: Negotiated wage growth is accelerating across the Eurozone, exceeding previous expectations. This is a key concern for the European Central Bank (ECB) as it could fuel a wage-price spiral.
3. Unemployment Rate: The historically low unemployment rate (currently 6.4%) indicates a tight labor market, further contributing to wage demands.
4. Producer Price Index (PPI): While PPI growth has slowed from its peak,it remains positive,suggesting that input costs for businesses are still rising.
5. Consumer Confidence: Despite inflation, consumer confidence remains surprisingly resilient, indicating continued spending power. Though, this could be short-lived if inflation continues to erode purchasing power.

Sectoral Breakdown: Where are Prices Rising Fastest?

Analyzing inflation by sector reveals specific areas of concern.

* Services: The largest contributor to the overall increase, driven by labor costs and strong demand. Sectors like tourism and hospitality are experiencing particularly strong price growth.

* Non-Food Goods: Inflation in durable and non-durable goods remains elevated, reflecting supply chain disruptions and increased production costs.

* Energy: While energy price increases have moderated from their peak in 2022, they remain a significant factor, particularly with ongoing geopolitical instability.

* Food, Alcohol & Tobacco: Food inflation, though easing, continues to impact household budgets, especially for lower-income families.

The ECB’s Response and Future Monetary Policy

The European Central Bank (ECB) is closely monitoring these Euro Indicators and has signaled its commitment to bringing inflation back to its 2% target.

* Interest Rate Hikes: The ECB has implemented a series of interest rate hikes throughout 2024 and early 2025. The impact of these hikes is beginning to be felt, but with a lag.

* Quantitative Tightening: The ECB is also reducing its balance sheet through quantitative tightening, further tightening monetary conditions.

* Forward Guidance: The ECB’s forward guidance suggests that further rate hikes are possible,depending on the evolution of inflation and economic data.

Analysts predict the ECB will adopt a data-dependent approach, carefully assessing the impact of its previous actions before making further policy adjustments. The interest rate outlook remains uncertain, contingent on incoming economic data.

Impact on Consumers and Businesses

The rising inflation rate is impacting both consumers and businesses across the Euro Area.

For Consumers:

* Reduced Purchasing Power: Higher prices erode the purchasing power of consumers, leading to a decline in real incomes.

* increased Cost of Living: Essential goods and services, such as food, energy, and housing, are becoming more expensive.

* Savings Erosion: Inflation diminishes the value of savings, particularly for those holding cash.

For Businesses:

* Increased Input Costs: Businesses are facing higher costs for raw materials, energy, and labor.

* Reduced profit Margins: Businesses may struggle to pass on higher costs to consumers, leading to reduced profit margins.

* Investment Uncertainty: high inflation creates uncertainty, discouraging investment and economic growth.

Real-World Example: Germany’s Inflation Experience

Germany, the Euro Area’s largest economy, provides a compelling case study. Germany experienced a particularly sharp rise in energy prices following the Russia-Ukraine conflict. this led to significant inflationary pressures, prompting the German goverment to implement energy relief measures. However, even with these measures, inflation remained elevated, impacting German consumers and businesses. The German experience highlights the vulnerability of the