Eurozone inflation climbed to 2.2% in September, the highest since April, driven by services and energy prices.
Core inflation held at 2.3% for the fifth consecutive month, signaling persistent underlying pressures.
Annual inflation rose from 2.0% in August, while monthly prices edged up 0.1%, matching last month’s pace.
Services led the increase with a 3.2% annual rise, slightly above August’s 3.1%.
Food, alcohol, and tobacco grew 3.0%, down from 3.2%, while non-energy industrial goods stayed at 0.8%.
Energy costs fell 0.4%, a slower decline than August’s 2.0%.
Estonia recorded the eurozone’s highest inflation at 5.2%, followed by Croatia and Slovakia at 4.6% each.
Cyprus saw no annual change, and France reported a mild 1.1% rise.
Italy and Portugal showed monthly acceleration, with prices up 1.3% and 1.0% respectively.
ECB Maintains Steady Rate Policy
The ECB left interest rates unchanged in September, keeping the deposit facility at 2.00%.
Inflation projections forecast 2.1% in 2025, easing to 1.7% in 2026, and rising to 1.9% in 2027.
Core inflation is expected to decline gradually, supporting the ECB’s cautious approach.
President Christine Lagarde said the ECB faces no urgency to tighten or ease policy.
Economist Riccardo Marcelli Fabiani noted cooling wage growth, low energy prices, and strong euro will push inflation downward.
Analysts expect the ECB to maintain rates at the October 30 meeting.
Markets React to US Shutdown Concerns
The euro rose to 1.1750 against the US dollar amid a selloff in the greenback caused by the federal shutdown.
The shutdown threatens to furlough workers and delay key economic data, including Friday’s nonfarm payrolls report.
Wall Street futures declined, while European equities showed mixed movements.
The EURO STOXX 50, Germany’s DAX, and France’s CAC 40 each gained 0.3%, while Italy’s FTSE MIB fell 0.1%.
The broader EURO STOXX 600 climbed 0.5%, with Sartorius up 9%, Sanofi 4%, and Novo Nordisk 3.3%.
Defence stocks underperformed: Rheinmetall lost 2.3%, Leonardo dropped 2%, and Thales declined 1.4%.
