February macroeconomic data from the largest eurozone economies delivered divergent results. While inflation in Germany decelerated to 1.9%, falling below the inflation target, France recorded a sharp price increase of 1%. This situation poses new challenges for the European Central Bank in shaping monetary policy, especially in the face of cheaper energy and more expensive food across the region.
Germany Below Target
Inflation in Germany fell to 1.9%, reaching a level below the European Central Bank's target thanks to cheaper energy.
Price Jump in France
France recorded an unexpected inflation increase of 1% month-on-month, resulting from energy price revisions.
Stabilization in Spain
Inflation in Spain remained at 2.3% year-on-year, indicating price stabilization in the Mediterranean region.
The latest Consumer Price Index readings in Europe paint a picture of a two-speed economy. The German Federal Statistical Office (Destatis) reported a drop in the annual price growth rate to 1.9%. This result is better than analysts' forecasts, who expected the indicator to remain around 2%. The main factor curbing price increases for our western neighbors turned out to be lower energy prices, which offset persistent price pressure in the services and food products sectors. However, the situation varied across individual federal states – from stabilization in Saxony to a 2.2% increase in Hesse. Inflation in France surprised markets in the opposite direction. The French statistical office Insee reported a monthly price jump of 1%, which is mainly explained by the expiration of government energy shields and an increase in household spending. Nevertheless, data on France's GDP growth for the fourth quarter of 2025 (0.2%) suggest that this economy shows some resilience to price shocks, although cost pressure remains higher than in Germany. The European Central Bank has been pursuing a restrictive monetary policy since 2022, raising interest rates to historically high levels to curb inflation triggered by the energy crisis and the pandemic. In Spain, the situation remains stable, with the annual price index holding at 2.3%. As in Germany, declines in the electricity market played a key role there, balancing out increases in other categories. The mixed data from the three largest eurozone economies will complicate the upcoming decisions of the ECB regarding potential cuts in interest rates. Investors are closely watching these readings, seeing them as signals regarding the pace of monetary policy easing in the coming months of the year. „En février, l'inflation en France fait un bond de 1%, selon l'Insee” (In February, inflation in France jumps by 1%, according to Insee) — Insee (French National Institute of Statistics and Economic Studies)