Eurozone inflation hits 3.8%, putting energy costs back in focus for the ECB
Eurozone inflation rose to 3.8% in September from 3.2% in August, its highest level in three years, according to Eurostat’s flash estimate. Energy prices rose 18.8% year on year, while core inflation edged up to 2.5%, leaving the ECB to weigh whether the shock is spreading beyond household energy bills before its 29 October decision.
Bottom line — The ECB’s next decision is on 29 October, as eurozone inflation stands 1.8 percentage points above its 2% target.
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Eurostat’s estimate puts monthly eurozone inflation at 0.6%; energy prices alone rose 3.9% in September.
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Services inflation increased to 3.2% from 3.0%, while food, alcohol and tobacco inflation rose to 1.4% from 1.1%, Eurostat reported.
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Core inflation, which excludes energy, food, alcohol and tobacco, edged up from 2.4% to 2.5%. Helsinki Times said the modest move suggests the energy shock has not yet spread across prices on the same scale.
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Lithuania recorded the euro area’s highest annual rate at 6.1%; Malta had the lowest at 2.4%, according to Eurostat’s flash estimate.
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Luxembourg’s annual rate reached 5.2%, up from 4% in August, Luxembourg Times reported; its national statistics bureau uses a different method and will publish its own figures on 7 October.
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The ECB has raised rates twice this year. The Governing Council’s next monetary policy decision is due on 29 October, with market expectations for further increases shifting alongside energy prices and incoming data, Helsinki Times reported.
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The Economist reported that eurozone business activity reached a 41-month high in September, even as inflation moved further above the ECB’s target.