BRUSSELS, Jan. 7 (Xinhua) -- Annual inflation in the euro area is expected to ease to 2 percent in December 2025, down from 2.1 percent in November, according to a flash estimate released on Wednesday by Eurostat, the statistical office of the European Union.
By main components, services are projected to post the highest annual rate at 3.4 percent in December, slightly lower than 3.5 percent in November. Food, alcohol and tobacco are expected to rise 2.6 percent year-on-year, up from 2.4 percent a month earlier, while non-energy industrial goods are seen at 0.4 percent, compared with 0.5 percent in November. Energy prices are estimated to fall 1.9 percent year-on-year, following a 0.5-percent decline in November.
Among major euro area economies, Germany's annual inflation is estimated at 2 percent in December, down from 2.6 percent in November; France is seen at 0.7 percent, down from 0.8 percent; Italy at 1.2 percent, up from 1.1 percent; and Spain at 3.0 percent, down from 3.2 percent, according to the data.
With headline inflation returning to the European Central Bank (ECB)'s 2-percent target and energy still acting as a drag on prices, analysts said the ECB may have room to stay patient, watching whether services inflation continues to cool and how growth holds up amid lingering uncertainties such as trade and geopolitical risks.
ING Chief Economist Bert Colijn said the ECB expects inflation to be slightly below target in 2026 and 2027 before returning to 2 percent in 2028. With such expectations, policy rates are likely to remain stable for the time being, he said, adding that the ECB is in a "luxury position" to wait for clearer signals on the economy and inflation before deciding its next move.
The ECB has kept its key rates unchanged in recent meetings, including its Dec. 18, 2025 decision, leaving the deposit facility rate at 2 percent. The level was set after a 25-basis-point cut in June 2025. ■