Today, European markets are once again turning their attention to inflation data, a topic that’s both critical and, let’s be honest, a bit of a headache for policymakers. But here’s where it gets controversial: despite the focus, this data is unlikely to shake up the European Central Bank’s (ECB) current stance. With markets largely ruling out any interest rate changes this year, the ECB seems to be in a wait-and-see mode, even as the specter of stagflation—especially in economic powerhouses like Germany—looms on the horizon. Policymakers are keeping a close eye on things, but for now, the inflation trend isn’t dramatic enough to force their hand.
Let’s break it down further. France’s inflation report, due later today, is expected to show headline annual inflation holding steady at 0.9% for November, with core inflation dipping slightly to 1.0% from October’s 1.2%. This places France on the softer end of the euro area’s inflation spectrum. But here’s a detail most people miss: starting with the January 2026 readings, France’s statistical office, INSEE, will rebase its consumer price index to 2025. This technical change could make annual inflation figures look lower, even if prices continue to rise. It’s a nuance worth keeping in mind.
Now, shifting to Germany, the picture is a bit different. Headline annual inflation is expected to cool to 2.1%, down from November’s 2.3%. However, the more critical figure—core inflation—remains stubbornly high at 2.7%, only a slight dip from October’s 2.8%. This persistent elevation above the 2% target is a sticking point, raising questions about how long the ECB can afford to stay on the sidelines. Is this the new normal, or will it force a policy rethink?
For those tracking today’s German state CPI releases, here’s the schedule (though, fair warning, these timings can sometimes shift):
- 0930 GMT: North Rhine-Westphalia
- 0900 GMT: Brandenburg, Hesse, Bavaria, Saxony
- 1300 GMT: Germany national preliminary figures
So, what’s your take? Is the ECB right to hold off on action, or should they be more proactive in addressing inflation? Let’s hear your thoughts in the comments—this is one debate that’s far from settled.
