Filenews 26 May 2025 - by Theano Thiopoulou
Optimism prevails that inflation in 2025 and 2026 in several Eurozone countries will have reached the 2% target set by the European Central Bank and is the compass for monetary policy. The Commission's estimates give a note of optimism that inflation is gradually receding and other countries have better and others more modest performances. Starting at a higher level in 2024, inflation in the EU is projected to continue to decline to 1.9% in 2026.
Headline inflation in the euro area is projected to decline from 2.4% in 2024 to an average of 2.1% in 2025 and 1.7% in 2026. In Cyprus, food and tourism prices increased significantly in early 2025, reflecting the delayed transmission of wage growth and strong tourism demand.
These temporary inflationary pressures are expected to gradually subside as wage growth normalizes and prices of goods, including energy, moderate. However, HICP inflation is projected to converge at 2% in 2025 by 2026 and Cyprus will be one of the few countries to be within this target. France leads for 2025 with 0.9%, Ireland with 1.6%, Finland with 1.7%, Italy with 1.8%
According to the data analyzed by "F", for each country the differences are highlighted and what are the reasons that affect inflation.
– In Belgium, inflation is forecast to fall to 2.8% in 2025 and 1.8% in 2026, due to lower pressures on industrial goods and energy prices.
In Germany, after falling to 2.5% in 2024, inflation is forecast to slow further to 2.4% in 2025 and 1.9% in 2026. Sharp declines in wholesale energy markets at the beginning of 2025 herald a deflationary effect on retail energy prices.
– In Estonia, headline inflation is forecast to stand at 3.8% in 2025 and slow to 2.3% in 2026, as the impact of the country's fiscal measures will gradually fade, as will global pressures on food, energy and non-energy industrial goods.
– In Ireland, inflation remained low at the beginning of 2025, averaging 1.6% in the first quarter. However, rising food prices, combined with a slower decline in energy prices and still high service inflation, kept rates slightly higher than in previous quarters. Looking ahead, lower prices of non-energy industrial goods and reductions in commodity prices are expected to reduce inflation, and headline inflation is forecast to reach 1.6% in 2025 and 1.4% in 2026.
– In Greece, average inflation stood at 3% in 2024, 0.6 percentage points above the euro area average. The de-escalation of inflation has been limited by the acceleration of service prices and the rise in electricity prices. In the future, wages are expected to continue to exert upward pressure on prices. As a result, services inflation is expected to slow only gradually over the forecast horizon. Overall, inflation is projected to stand at 2.8% in 2025 and 2.3% in 2026. Inflation excluding energy and food is projected to remain higher, at 3.5% and 2.6% in 2025 and 2026, respectively.
– In Spain, annual inflation averaged 2.9% in 2024 and is projected to continue to slow down in 2025, mainly due to the slowdown in energy prices, while service-related price pressures are expected to "gradually ease". Headline inflation is forecast to reach 2.3% in 2025, before declining further to 1.9% in 2026.
– In France, inflation is expected to remain broadly stable in 2025, due to the recent fall in the prices of energy commodities. Energy prices are projected to fall by 5.0% in 2025. Consumer price inflation is expected to decline to 0.9% in 2025 (after 2.3% in 2024) before rising slightly to 1.2% in 2026.
– In Croatia in 2025, headline inflation is forecast to decline to 3.4% from 4% in 2024, as energy inflation will rise and food and services inflation will slowly decline. Inflation excluding energy and food is projected to decline from 4.8% in 2024 to 3.4% in 2025 and 2.4% in 2026.
– In Italy falling energy prices exert strong downward pressure on headline inflation, keeping the 2025 annual rate below 2%. In 2026, wage restraints, productivity growth and a further fall in energy prices are projected to bring inflation down to 1.5%. In , as service inflation is expected to remain strong, due to wage growth, inflation is expected to reach 3% in 2025 and 1.7% in 2026. Although prices for services and processed foods are expected to moderate in 2026, headline inflation excluding energy and non-processed foods is expected to remain above HICP inflation in 2025 and 2026. In , inflation is expected to rise to 2.6% in 2025 due to rising energy and food prices in the first months of the year, but to decline to 1.2% in 2026, supported by lower commodity prices. In , headline inflation is expected to decline to 2.1% in 2025 due to the slowdown in food and services prices, and is forecast to decline further to 1.8% in 2026.
