Friday, November 28, 2025 8:50 AM EST
Image Source: Pixabay
Headline inflation remained unchanged in November, providing new ammunition for those at the European Central Bank arguing against further rate cuts.
Still too high
German headline inflation, according to the national measure, remained unchanged at 2.3% year-on-year in November. The European measure increased to 2.6% YoY from 2.3% YoY in October. Core inflation dropped somewhat to 2.7% YoY, while services inflation remained unchanged at 3.5% YoY.
The available regional state data shows that prices for leisure and services actually dropped in November compared to October. Year-on-year inflation in almost all categories remained broadly unchanged.
Looking ahead, the inflation outlook has become more mixed, with both disinflationary and inflationary drivers at play. On the one hand, the stronger euro and favourable energy base effects, as well as domestic and foreign companies re-channelling products from the US to Europe at dumping prices, are all disinflationary forces. The disinflationary story is also supported by the ongoing drop in producer and import prices, normally a good leading indicator for headline inflation. On the other hand, selling price expectations in both services and manufacturing have increased again recently, and the incoming fiscal stimulus should also lead to new inflationary pressures, at least in certain sectors.
In short, due to base effects, German headline inflation should move towards 2% at the turn of the year before reaccelerating again. However, to echo the words of the ECB, German inflation risks to the outlook in both directions are higher than normal. This is why today’s inflation data will hardly have any impact on the ECB’s meeting in December. If anything, it strengthens the point of those at the ECB arguing against additional rate cuts.
More By This Author:
German Labor Market Improves In November
ECB Minutes Show That Door To Rate Cuts Is Not Closed, Yet
Ifo Index Paints A Bleak Picture Of Germany’s Economy At Year-End
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...
more
Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice.
The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions.
Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is deemed authorised by the Prudential Regulation Authority and is subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. The nature and extent of consumer protections may differ from those for firms based in the UK. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.. ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.
less
How did you like this article? Let us know so we can better customize your reading experience.
