Today, inflation data takes center stage in European trading, but it’s unlikely to bring about any significant shifts in the outlook for the European Central Bank (ECB). Currently, the central bank finds itself in a holding pattern, with market participants not expecting any changes to interest rates in the upcoming year. Given the potential risks of stagflation, especially in Germany, policymakers are remaining alert and attentive, closely monitoring economic trends as they develop.
For the moment, the prevailing inflation trends are not compelling enough for the ECB to take decisive action or alter their current stance.
Later today, France is expected to release a report indicating that the annual headline inflation rate for November remains steady at 0.9%. Meanwhile, core annual inflation is projected to decrease slightly to 1.0%, down from 1.2% in October. This part of the inflation story can be considered relatively mild within the broader context of the euro area’s economic landscape.
However, it’s important to note that when we receive the January 2026 inflation figures next month, INSEE will be recalibrating the reference year for the consumer price index, essentially rebasing it to 2025. This adjustment could lead to lower annual inflation readings, even if the actual prices continue to rise steadily. So, keep this in mind as we move forward.
Turning our attention to Germany, predictions suggest a decline in the headline annual inflation rate. The expectation is for a reading of 2.1%, down from 2.3% in November. Yet, the core annual inflation figure is particularly crucial to watch; it’s forecasted to slightly decrease to 2.7% in November from 2.8% in October. Despite this small drop, it remains elevated, firmly above the 2% mark.
Here’s what to expect on the agenda today regarding the Consumer Price Index (CPI) releases from various German states:
- 0930 GMT: North Rhine-Westphalia
- 0900 GMT: Brandenburg
- 0900 GMT: Hesse
- 0900 GMT: Bavaria
- 0900 GMT: Saxony
- 1300 GMT: Preliminary national figures for Germany
Please be aware that these releases may not always adhere strictly to the scheduled times and could arrive slightly earlier or later than expected.
