Eurozone Consumer Confidence Weakens Unexpectedly in December 2025 Despite Cooling Inflation

The European Commission’s flash Eurozone consumer confidence indicator unexpectedly weakened in December 2025, falling to -14.6 from November’s -14.2, missing economist expectations of -14.0 [1]. This decline occurred against a seemingly favorable backdrop: euro area inflation cooled to 2.1% in November, stable from October and near the European Central Bank’s (ECB) 2% target [2], and the Eurozone economy showed resilience against tariff pressures [1].

The disconnect between cooling inflation (a typical driver of improved consumer sentiment) and the weakening confidence can be partially explained by concurrent data showing weaker-than-expected Eurozone business activity at the end of 2025. Manufacturing contraction deepened, while services expansion eased, suggesting a broader softening in the economy [3]. Consumers may have reacted to indirect signals of economic slowdown (e.g., media coverage of business weakness) despite easing direct inflation pressures.

1. Disconnect Between Inflation and Sentiment
   : The December decline challenges the traditional link between cooling inflation and improving consumer confidence, indicating that underlying anxieties (possibly related to future job security, lingering price sensitivity, or geopolitical/tariff uncertainty beyond reported “resilience”) persist.
2. GDP Growth Vulnerability
   : With private consumption accounting for ~54% of Eurozone GDP [4], sustained weak consumer sentiment could lead to reduced spending, slowing overall economic growth in early 2026.
3. ECB Policy Reassessment Potential
   : While the ECB is currently focused on inflation stability (near target), persistent weak consumer sentiment may prompt policymakers to reevaluate the economic outlook in future meetings [3].

• Risks
  :
  • Slower GDP growth due to reduced consumer spending [4].
  • Potential dampening of investor sentiment toward Eurozone equities and the euro [3].
  • Unidentified underlying consumer anxieties (e.g., job security, future inflation) could amplify the decline in confidence if left unaddressed.
• Opportunities
  :
  • The ECB may adjust its policy stance to support the economy if weak sentiment persists, potentially stimulating growth [3].
  • The near-target inflation rate provides policy flexibility for the ECB to respond to economic softening.

• Eurozone consumer confidence (flash) slipped to -14.6 in December 2025, down from -14.2 in November [1].
• Inflation cooled to 2.1% in November, near the ECB’s 2% target [2].
• The decline coincided with weaker business activity: manufacturing contracted more, and services expansion slowed [3].
• Private consumption accounts for ~54% of Eurozone GDP, linking sentiment to growth [4].
• Information gaps include exact reasons for consumer anxiety, regional confidence variations, and specific tariff resilience data.

This summary provides objective context for understanding the unexpected consumer sentiment trend without making investment recommendations.