Slight Uptick in Eurozone Inflation Makes December Rate Decision "Easy" for The ECB, Says ING

08:04 AM EST, 12/02/2025 (MT Newswires) -- Once again, inflation remains within 0.2 percentage point of the 2% target in the eurozone, said ING after headline inflation increased from 2.1 year over year to 2.2% in November.

The higher inflation rate was mainly due to a smaller negative contribution from energy prices, wrote the bank in a note on Tuesday. Food and core inflation remained stable at 2.3 year over year and 2.4% year over year, respectively, although services inflation -- the largest component of core inflation -- contributed more than last month with an increase from 3.4 to 3.5%.

Despite a muted growth environment, falling wage growth and declining import prices, businesses do expect that prices will grow faster in the months ahead, stated ING. This is especially the case for services.

Still, with disinflationary pressures abounding, the bank expects that inflation will likely hold around the current level for the foreseeable future.

Markets hadn't been pricing a rate cut by the European Central Bank at its Dec. 18 policy meeting and Tuesday provides little reason to change that view, added ING. The stability of the short-term inflation outlook makes the ECB projections far more interesting.

The bank estimates that inflation can fall below target in the months ahead, but for the medium term, there seems to be enough inflationary drivers around for the ECB not to tilt too dovish. Still, much depends on whether ambitious domestic fiscal agendas can be realized, according to ING.

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