Societe Generale analysts expect the disinflation narrative to dominate in 2026, driven by moderating wage growth and supportive commodity dynamics. They forecast headline inflation to average 1.7% in 2026, down from 2.1% in 2025. Analysts highlight two-sided risks that could impact this outlook, including factors like China's excess supply and energy markets.

Inflation trends and forecasts

"We still expect the disinflation narrative to dominate in 2026, even if two‑sided risks could slightly alter the picture. An optical decline in inflation is likely, although the usual seasonal uncertainty in January means the outcome should be interpreted with some caution."

"We expect disinflation to dominate 2026, driven by moderating wage growth and supportive commodity dynamics, particularly in Brent and agricultural prices. We forecast headline inflation to average 1.7% in 2026, down from 2.1% in 2025, though risks remain two‑sided, including China’s excess supply, FX, energy markets, Germany’s fiscal stance, and demographic pressures."

"The disinflationary trend should start in January, when base effects and softer annual regulated price resets (insurance, energy, health, communication, etc) are set to lower headline inflation to 1.7% yoy from 1.9% in December, though methodological changes increase uncertainty."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)