Key Economic Indicators — At a Glance
$6.12
Big Mac price in the US (Jan 2026)
Global benchmark — up from $5.79 in Jan 2025
$7.05
Big Mac price in the Euro area (Jan 2026)
15% above US — euro now overvalued
2.6%
Eurozone inflation (March 2026)
Up from 1.9% in Feb (revised)
2.0%
ECB deposit rate (March 2026)
Held — down from 4.0% peak
Sources: Big Mac prices: The Economist Big Mac Index — January 2026 edition (official data repo) · Inflation: Eurostat HICP (March 2026, revised) · ECB rate: ECB Monetary Policy Decisions (March 2026 hold)
Five Signals Pointing the Same Direction
Inflation · March 2026
2.6%
Reversed from 1.9% in February. Back above the ECB target.
Eurozone GDP forecast · 2026
1.1%
5th consecutive year below the pre-2020 trend of ~1.8%.
ECB deposit rate · hold
2.0%
Paused March 2026, after eight consecutive cuts from 4.0%.
US tariff ceiling · EU goods
15%
Plus "second China shock" risk flagged by the European Parliament.
The read across
5 / 5
All five signals moved the same direction in Q1 2026. Closer to Japan's 1990s stagnation than to 2008 or 2020.
The Big Mac Index just flipped — the euro is now 15% overvalued January 2026 · USD
A McDonald's Big Mac costs $7.05 in the euro area and $6.12 in the US. For the first time in a generation, a burger in Europe is more expensive than in America. The January 2026 Big Mac Index reverses more than twenty years of euro undervaluation — a year ago the euro priced 17% below the dollar on this test; today it prices 15% above. A 32-percentage-point swing in twelve months.
🇨🇭 Switzerland
$9.08
Swiss franc 48% above the US benchmark — the most overvalued currency in the ranking.
🇳🇴 Norway
$7.52
Norwegian krone 23% above US. High prices follow a high-income, commodity-rich economy.
🇸🇪 Sweden
$7.26
Krona 19% above US — a material revaluation since Jan 2025.
🇬🇧 United Kingdom
$7.08
Sterling 16% above US — previously near parity in Jan 2025.
🇪🇺 Euro area (avg)
$7.05
Euro 15% above US. Flipped from 17% below the dollar in Jan 2025 — the story of 2025.
🇺🇸 United States
$6.12
Global benchmark — up from $5.79 in Jan 2025.
🇨🇳 China
$3.66
Yuan 40% below the US price — still significantly undervalued on PPP.
🇯🇵 Japan
$3.03
Yen 51% below US — the outlier among developed-world currencies.
🇮🇳 India
$2.51
Indian rupee 59% below US. The benchmark for low-cost markets.
Source: The Economist Big Mac Index — January 2026 edition, official data repository. The Big Mac Index was created by The Economist in 1986 as a lighthearted guide to purchasing-power parity. A Big Mac above the US price of $6.12 suggests a locally overvalued currency; below suggests undervaluation on PPP terms. Dollar prices above are the reported local price converted at the Jan 2026 FX rate.
Luxury just split — FY2024 vs FY2025
Hermès · Luxury
+5.5%
€15.17B (FY24) → €16.00B (FY25). Still growing. The only major European luxury house with positive reported revenue in FY2025.
Adidas · Sportswear
+4.8%
€23.68B → €24.81B. Currency-neutral adidas-brand growth was +13%. A clear recovery from the flat 2022–23 window.
LVMH · Luxury
−4.6%
€84.68B → €80.75B. LVMH's first reported annual revenue decline in a decade. Fashion & Leather Goods softness was the drag.
Kering · Luxury
−13.0%
€16.87B → €14.67B. The biggest casualty of the cohort. Gucci's ongoing reset drives the decline; comparable sales −10%.
Revenue trajectory: Company-reported full-year revenue for FY2024 vs FY2025. Kering figures excl. Kering Beauté (reclassified as discontinued operations under IFRS 5). All figures from company-released FY2025 results, linked per card. The 2025 pattern: Hermès kept growing, Adidas recovered, LVMH fell for the first time in a decade, Kering accelerated its decline.
Real wages — four years of households losing ground
EU real wages · 2022
−3.9%
The largest single-year real-wage decline in EU records, driven by the 2022 energy-price spike.
EU real wages · 2023
−0.4%
Still below inflation. Households saw no recovery despite falling headline inflation.
EU real wages · 2024
+2.8%
First positive year since 2021 — but the cumulative gap versus 2021 is still negative across most of the eurozone.
Euro area real compensation · 2025
+1.8%
Second consecutive year of positive real growth — but the pace has halved versus 2024. The cumulative gap versus 2021 is still not closed.
Sources: European Commission — Labour Market & Wage Developments 2024 · OECD Employment Outlook 2025 · ECB Staff Projections — March 2026. Cumulative real wages across the EU are still below 2021 in most member states — meaning households are poorer in real terms than before the inflation cycle began.
Eurozone Inflation — The Rollercoaster (2022–2026)
Euro Area Annual Inflation Rate (HICP, %)
Source: Eurostat HICP — tec00118. Annual average rates for 2022–2024; monthly readings for 2025–2026. The eurozone hit 10.6% in October 2022 (peak), driven by energy prices following the 2022 European energy crisis. By late 2025, inflation had returned close to the ECB's 2% target.
Growth vs. Monetary Policy — The ECB Balancing Act
Eurozone GDP Growth (%)
ECB Deposit Rate (%)
Sources: GDP: Eurostat national accounts (2022–2024 actual). 2025–2026 forecasts: IMF World Economic Outlook (October 2025). ECB rate: ECB Monetary Policy Decisions. Deposit rate peaked at 4.0% in Sep 2023; eight cuts from June 2024 to June 2025 brought it to 2.0% by March 2026.
Consumer Confidence — Still Fragile
Euro Area Consumer Confidence Indicator (Eurostat)
Source: Eurostat Consumer Confidence Indicator. The indicator is a subindex of the Economic Sentiment Indicator (ESI). Zero = long-term average. Readings below zero indicate below-average confidence. The record low of -28.7 was hit in September 2022 amid the energy crisis. March 2026 reading of -16.3 reflects renewed uncertainty from trade policy shifts.
Trade Tensions — The 2025–2026 Tariff Shock
US tariff ceiling on EU goods
15%
Broad US tariffs imposed 2025. EU, Japan and Korea negotiated a cap at 15% on most categories including cars, parts, timber.
Second China shock · risk
Material
EU Parliament flags that Chinese exports diverted from the US could flood Europe — steel, electronics, machinery.
IMF warning
Significant
WEO Oct 2025: trade-war escalation is a "significant risk" to global growth and could prompt further eurozone downgrades.
ECB Rate Decisions — Timeline 2022–2026
July 2022
First rate hike in 11 years
ECB raises deposit rate from 0% to 0.5%, ending the negative rate era. Inflation at 8.9%.
September 2023
Peak: deposit rate hits 4.0%
After 10 consecutive hikes, the ECB pauses. The fastest tightening cycle in ECB history.
June 2024
First cut — easing cycle begins
ECB cuts by 25bps as inflation falls toward 2.5%. First rate reduction since 2016.
December 2024
Fourth cut of 2024
Deposit rate reaches 3.0% after four quarter-point cuts. Growth remains sluggish at 0.9%.
June 2025
Rate at 2.15% — eight cuts total
ECB completes eight cuts from the peak. Inflation hovering around 2%. Growth forecast at 1.2%.
March 2026
Hold at 2.0%
ECB pauses. Inflation ticking up to 2.6% in March — trade policy uncertainty complicates the outlook.
Three Scenarios — 2026–2027
Soft landing · lower likelihood
1.5%
Growth edges up. Inflation back to 2%. ECB resumes cuts. Requires tariff de-escalation + confidence rebound. None of the five signals point this way today.
Stagnation · base case
~1.0%
Growth flat. Inflation sticky at 2.3–2.6%. ECB on hold. Not a crisis — a compression. Consumer confidence stays negative through 2027.
Harder landing · material risk
<0.5%
Growth falls below half a point. First technical recession since 2020. Triggered by tariff escalation, Chinese export flood, or fresh energy shock.
Sources: Scenario analysis based on published data from the IMF WEO (October 2025), ECB Staff Projections (December 2025), and European Commission Spring 2025 Forecast. Not forecasts — scenario analysis based on current trajectories. Not investment advice.
About the Author
TrendsOnFire is a AI based market intelligence platform publishing analysis on retail, technology, supply chain, finance, compliance, education, people and transformation trends across Europe.
Created by Olga Bressers, a senior executive with experience in sales & digital operations, ecommerce, omni-channel retail, supply chain, programs management and business transformation.