Eurozone Inflation Accelerates In September

(RTTNews) - Eurozone inflation accelerated in September as the decline in energy prices slowed amid rising services inflation, reinforcing the expectations that interest rates are set to remain unchanged in the near term.

Inflation rose to 2.2 percent in September, in line with forecast, from 2.0 percent in August, flash estimate from Eurostat showed on Wednesday. A similar higher rate was last seen in April.

Meanwhile, core inflation that exclude prices of food and energy, held steady at 2.3 percent.

The European Central Bank had lowered its interest rates last in June, when they were cut by a quarter-point. The bank had reduced rates by 25 basis points each in every rate-setting session since September last year.

The ECB Staff projected the headline inflation to ease to 1.7 percent in 2026 from 2.1 percent this year. Core inflation was expected to average 2.4 percent this year and 1.9 percent next year.

ING economist Bert Colijn said inflation is likely to slightly undershoot the ECB's target of 2 percent in the months ahead.

The economist forecasts core inflation to remain very steady over the coming months. It seems reasonable to expect this measure to decline very slowly in the coming quarters. Colijn expects the ECB to hold rates steady for now.

Data showed that the growth in food, alcohol and tobacco prices eased to 3.0 percent from 3.2 percent, while services inflation rose to 3.2 percent from 3.1 percent.

Energy prices logged a monthly fall of 0.4 percent, much slower than the 2.0 percent decrease in August. At the same time, non-energy industrial goods prices registered a stable growth of 0.8 percent.

On a monthly basis, the harmonized index of consumer prices edged up 0.1 percent in September.