Eurozone Inflation Climbs to 2.2% in November, Exceeding ECB's Target

Eurostat reported on December 11, 2025, that the Eurozone's annual inflation rate increased to 2.2% in November, up from 2.1% in October. This marks the third consecutive month that inflation has exceeded the European Central Bank's (ECB) 2% target.

The services sector was the primary driver of this uptick, with inflation rising to 3.5% in November from 3.4% in October, reaching its highest level since April. This suggests strong domestic price pressures. Other components remained stable, with food, alcohol, and tobacco at 2.5%, non-energy industrial goods at 0.6%, and energy prices declining at a slower pace of -0.5% compared to -0.9% in October.

Core inflation, which excludes volatile items like food and energy, held steady at 2.4% in November, slightly below the forecast of 2.5%.

Among the Eurozone countries, Germany reported the highest annual inflation rate in November at 2.6%, up from 2.3% in October. In contrast, France and Italy recorded lower rates at 0.8% and 1.1%, respectively.

The ECB is scheduled to hold its next policy meeting on December 18, 2025. While the current deposit rate stands at 2%, the central bank has not indicated any immediate changes. ECB President Christine Lagarde has acknowledged the progress in controlling inflation but remains cautious due to global uncertainties and persistent services costs.

In contrast to the ECB's current stance, other central banks are adjusting their policies. The Bank of England is expected to cut interest rates by 25 basis points to 3.75% on December 18, 2025, in response to easing inflation and a slight uptick in unemployment. Similarly, the Bank of Japan is anticipated to raise its short-term interest rate from 0.50% to 0.75% at its upcoming meeting, influenced by inflation concerns and a weakened yen.

The persistent inflation above the ECB's target may impact consumer purchasing power and savings, potentially leading to increased costs of living. Businesses might face higher operational costs, which could be passed on to consumers. The ECB's cautious approach reflects a balancing act between controlling inflation and supporting economic growth amid global uncertainties.

As the ECB prepares for its upcoming policy meeting, the central bank faces the challenge of addressing inflationary pressures while fostering economic stability. The decisions made in the coming weeks will be crucial in shaping the Eurozone's economic trajectory in the face of evolving global dynamics.