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Monthly inflation in December came in at 0.27%, slightly below analysts’ expectations (0.35%). As a result, annual inflation fell to 5.10%, down 20 bps from November, marking two consecutive monthly declines.

CPI rose 0.24% m/m in December. As a result, annual inflation closed 2025 at 1.51%, within the Central Bank’s target range and at its lowest level in eight years, reflecting a contained inflation environment.

The ECB followed the expected script on Thursday and kept the deposit facility interest rate unchanged at 2%. The decision, adopted unanimously, reinforces that the institution has entered a prolonged phase of interest rate stability, in which monetary policy loses some prominence.

The Board noted the uncertainty surrounding the inflation shock expected in early 2026 stemming from recently approved fiscal measures, which “are estimated to have a temporary effect, not necessarily proportional, on prices.”

The outlook for the global economy in the second half of the year is proving more positive than expected around April, when the protectionist shock from the US economy materialized.

November inflation was 2.5% month-on-month (31.4% year-on-year) and accumulated 27.9% in the first eleven months of the year.

November inflation was 0.07% monthly and declined to 5.3% annual, its first drop after four consecutive monthly increases. The fall was driven mainly by food and some services, while regulated prices continued to put upward pressure via water and fuel tariffs.