The inflation rate in the 21-country eurozone rose to 3.8% in September, from 3.2% the previous month, according to data released by the European Union’s statistics office, Eurostat, on Friday. The figure exceeded the 3.6% forecast in a Reuters poll and was driven mainly by higher fuel and natural gas prices.
Energy records the biggest annual increase
Energy prices in the eurozone recorded the largest annual increase, rising 18.8%, while food and tobacco prices increased 1.4%, compared with 1.1% in August.
Prices of non-energy industrial goods rose 1.1%, following a 1.2% increase in August, while services inflation reached 3.2%, compared with 3% in August.
Core inflation rises to 2.5%
Eurostat data showed that core inflation, which excludes volatile food and fuel prices and reflects underlying price trends, rose from 2.4% to 2.5%, driven by higher services prices.
Further rate hikes expected
The inflation rate was above the European Central Bank’s 2% target, supporting calls for further interest-rate increases after the bank approved two hikes last summer.
Investors expect as many as 3 more increases over the coming year in the deposit rate, which currently stands at 2.5%. Economists believe the European Central Bank may avoid major decisions for now to prevent adding to existing volatility, saying inflation trends do not yet warrant urgent action.
