Eurozone Inflation Forecast for January Misses Target, Latest Field Analysis from Germany

According to the latest analysis from Pantheon Macroeconomics reported via Jin10, eurozone inflation for January showed a higher-than-expected trend. The current consensus range reaches 1.8%, surpassing the previous estimate of 1.6%. This data reveals that the economic situation on the ground, especially from Germany’s perspective with its dynamic market conditions, exerts stronger inflationary pressure than analysts anticipated.

Analysis by Claus Vistesen and Ankita Amajuri of Pantheon Macroeconomics depicts a complex macroeconomic environment in the eurozone. The fourth quarter of 2025 shows solid GDP growth, while unemployment rates remain stable across the region. These factors create a scenario where monetary authorities are likely to hold off on lowering interest rates in the near future.

Inflationary Pressure in Germany: More Than Just Energy

Although electricity and gas costs have significantly decreased, Germany faces inflation challenges from other segments. The surge in food prices is a major contributor, followed by increases in core goods. Persistent inflation in the services sector has offset the benefits gained from energy price reductions, creating a price dynamic that remains overall high in the German consumer market.

Price Dynamics in Spain: Hidden Core Stability

The situation in Spain presents a different pattern but remains a concern. Overall inflation rates show a decline influenced by statistical base effects, but core inflation—excluding volatile components like food and energy—remains steady. Stability in this core metric indicates that fundamental price pressures have not fully eased in the Spanish economy.

Monetary Policy Implications

The combined outlook of German and Spanish data forms a more cautious perspective for eurozone policymakers. Robust economic growth coupled with persistent core inflation creates a dilemma for the European Central Bank in deciding the next move. This scenario suggests that interest rate cuts may occur more slowly than previously expected by the market.