ECB and OECD Forecast Europe's Inflation Trends Through 2026
Frankfurt, Monday, 8 September 2025.
Inflation rates in Europe are projected to vary significantly by 2026, with Lithuania seeing substantial increases, while Turkey anticipates a major decline. Key factors include food costs and tariffs.
Varying Inflation Rates Across Europe
The latest projections from the European Central Bank (ECB) and the Organisation for Economic Co-operation and Development (OECD) indicate that inflation rates in Europe will display significant variability through 2026. Lithuania is expected to experience one of the highest increases in inflation, with rates projected to rise from 0.9% in 2024 to 4% in 2025, influenced primarily by increasing food and energy prices [1]. On the other hand, Turkey’s inflation is anticipated to decline sharply, dropping by 27.1 percentage points from 58.5% in 2024 to 31.4% in 2025 [1].
Factors Influencing Inflation
The inflation projections across Europe are being shaped by various factors such as food inflation, energy prices, and tariffs. In Lithuania, the rise in food and energy costs is a significant contributor to the increased inflation rate. Meanwhile, Latvia is expected to see high core inflation due to strong wage growth driven by labor shortages, alongside rising food prices [1]. Additionally, the impact of tariffs, particularly those imposed by the United States, is expected to have a limited effect on France due to its low exposure to the US market [1].
Inflation Projections for Major Economies
Among the five largest European economies, the United Kingdom is projected to have the highest inflation rate in 2025 at 3.1%, largely due to increases in the national minimum wage, employer social security contributions, and utility bills [1]. France, in contrast, is projected to have the lowest inflation rate at 1.2% in 2025, with a slight rise to 1.66% in 2026 [1]. Despite these differences, the overall trend across Europe suggests a fall in inflation rates in 2026 compared to 2025, with only five countries expected to see an increase [1].
Economic Implications and Future Outlook
The projected inflation trends present both challenges and opportunities for European economies. Policymakers and businesses must navigate these dynamics carefully to mitigate potential adverse effects while capitalizing on any economic opportunities. For instance, the decline in Turkey’s inflation could signal a shift towards greater price stability, which may facilitate economic growth. Conversely, rising inflation in countries like Lithuania may necessitate policy interventions to curb inflationary pressures. The ECB and OECD’s projections provide critical insights for strategic planning and economic policymaking across the region [1].