Eurozone inflation increased to 2.2% in September, rising from 2.0% in August, Eurostat’s flash estimate confirmed.
Prices rose 0.1% month-on-month, repeating August’s pace, and matched economists’ expectations.
Core inflation, excluding food and energy, stayed firm at 2.3% for the fifth consecutive month.
Services drove inflation higher with a 3.2% annual rise, edging up from 3.1% in August.
Food, alcohol, and tobacco prices grew 3.0%, easing slightly from 3.2%.
Non-energy industrial goods held steady at 0.8%, while energy prices 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 posted no annual change, while France registered a modest 1.1% rise.
Monthly figures revealed sharp increases in Italy at 1.3% and Portugal at 1.0%.
ECB Holds Firm on Rates Amid Rising Prices
The ECB left interest rates unchanged in September, keeping the deposit facility at 2.00%.
Its projections see inflation averaging 2.1% in 2025, falling to 1.7% in 2026, then edging up to 1.9% in 2027.
Core inflation is forecast to decline gradually over the same period.
ECB President Christine Lagarde said the bank remains “in a good place” to hold rates steady.
Oxford Economics senior economist Riccardo Marcelli Fabiani stressed that inflation is on a downward path.
He argued the September uptick strengthens the ECB’s view that cutting rates now would be premature.
Markets broadly expect the ECB to maintain its stance at the next meeting on October 30.
Dollar Weakens as US Shutdown Worries Grow
The euro rose to 1.1750 against the US dollar, lifted by weakness in the greenback tied to shutdown concerns.
A US government shutdown threatens to furlough workers and delay key reports, including Friday’s nonfarm payrolls.
Investor sentiment fell as Wall Street futures declined on the shutdown risk.
European equities showed mixed signals. The EURO STOXX 50, Germany’s DAX, and France’s CAC 40 each added 0.3%.
Italy’s FTSE MIB slipped 0.1%, while the broader EURO STOXX 600 advanced 0.5%.
Sartorius surged 9%, Sanofi rose 4%, and Novo Nordisk climbed 3.3%.
Defence stocks fell, with Rheinmetall down 2.3%, Leonardo off 2%, and Thales sliding 1.4%.
