Eurozone inflation rose unexpectedly in November, increasing expectations that the European Central Bank (ECB) will maintain current interest rates in the near term, according to data released by Eurostat on Tuesday.
Consumer prices in the 20 countries using the euro climbed 2.2% from a year earlier, up from 2.1% in October, keeping inflation close to the ECB’s 2% target for most of 2025. Falling energy costs were offset by persistent price pressures in services, highlighting a mixed inflation picture across the bloc.
Core inflation, which excludes volatile items such as food and energy, held steady at 2.4%. Strong growth in service prices was balanced by weaker inflation in durable goods, suggesting underlying domestic demand remains firm while external cost pressures ease.
Analysts said the figures reinforce the ECB’s view that inflation is largely under control, giving policymakers time to monitor developments before considering any further action. Markets currently see almost no chance of a cut in the ECB’s 2% deposit rate at the final meeting of the year on 18 December, with only a 25% probability of easing in 2026. The ECB reduced rates by a combined two percentage points in the first half of the year but has paused since June.
Looking ahead, inflation is expected to fall below target early next year as energy prices continue to decline. Natural gas costs are more than 40% lower than a year ago, and crude oil prices have dropped over 10%, indicating that energy deflation may weigh on headline inflation. In November, energy prices fell 0.5% from a year earlier, while services inflation remained elevated at 3.5%, unprocessed food prices rose 3.3%, and non-energy industrial goods increased 0.6%, reflecting a mix of domestic and international factors.
Despite the anticipated drop in headline inflation, ECB policymakers have indicated they are more concerned with underlying trends than temporary swings caused by energy markets. Confidence is supported by steady economic growth across the bloc, with surveys and official data suggesting expansion near the eurozone’s potential of 1% to 1.5%.
Labour market conditions also remain relatively tight. Eurostat reported that the jobless rate edged up to 6.4% in October, indicating resilience in employment despite global uncertainty.
Economists note that the combination of moderate inflation, steady growth, and a tight labour market gives the ECB flexibility to maintain rates in the near term. Any discussion of easing is likely to depend on how sharply energy-related deflation affects broader price trends in the coming months.
