| Consensus | Consensus Range | Actual | Previous | Revised | |
| Month over Month | -0.3% | 0.5% | 0.7% | ||
| Year over Year | -2.0% | -2.0% to -1.6% | -2.1% | -1.7% | -1.4% |
Highlights
The December 2025 producer price data point to a clear cooling of upstream inflation across the euro area, driven primarily by energy price dynamics. Producer prices fell by 0.3 percent month-over-month, reversing November's increase and reinforcing the disinflationary trend already evident in consumer prices. On an annual basis, prices were 2.1 percent lower than a year earlier, confirming that cost pressures facing producers have eased materially.
Energy remains the dominant driver of this decline. A sharp monthly fall of 1.2 percent and an annual drop of 8.8 percent in energy prices exerted strong downward pressure on headline producer inflation. Excluding energy, however, prices continued to edge higher, rising by 0.1 percent month-over-month and 1.0 percent year-over-year. This divergence suggests that underlying cost pressures linked to manufacturing inputs and capital goods have not fully dissipated.
Intermediate and capital goods prices increased on an annual basis, indicating that firms continue to face moderate cost increases along supply chains. Durable consumer goods also recorded firmer price growth, which may gradually feed into consumer inflation if passed on.
In summary, the latest update suggests that headline producer disinflation is energy-led, while core industrial pricing remains mildly inflationary, pointing to a gradual and uneven normalisation of cost pressures. This brings the RPI to minus 11 and the RPI-P to 10, indicating that economic activity is now slightly below expectations in the euro area.
Market Consensus Before Announcement
Wholesale prices expected down 2.0 percent on year in December.
Definition
The Producer Prices Index (PPI) measures the gross trading price of industrial goods sold into the domestic market. Changes in the index provide a guide to inflation from the point of view of the product's producer/manufacturer and, in contrast to the consumer price index (CPI), excludes VAT and other deductible taxed associated with turnover. The PPI covers manufacturing, mining and quarrying and utilities but excludes construction. The headline index can be very volatile so financial markets look at a core index to better understand underlying trends. This excludes the often highly erratic energy subsector.
Description
The PPI measures prices at the producer level before they are passed along to consumers. Since the producer price index measures prices of consumer goods and capital equipment, a portion of the inflation at the producer level gets passed through to the HICP. By tracking price pressures in the pipeline, investors can anticipate inflationary consequences in coming months.
Like the HICP, Eurostat's producer price index is also harmonized across the EMU and the larger EU membership. Producer price indexes provide another layer of information on inflation and can be an early warning of inflationary pressures building in the economy. They also record the evolution of prices over longer periods of time. The PPI reports on input prices or commodity prices and can tell whether producers are able to pass through increases in costs to their customers.
The PPI is considered a precursor of both consumer price inflation and profits. If the prices paid to manufacturers increase, businesses are faced with either charging higher prices or taking a cut in profits. The ability to pass along price increases depends on the strength and competitiveness of the marketplace.
Producer prices are more volatile than consumer prices. The CPI includes services components which are more stable than goods, while the PPI does not. Commodity prices react more quickly to supply and demand. Volatility is higher earlier in the production chain. Partly because of this, financial markets will look to the core (ex-energy) index to provide a better guide to underlying trends.