Eurozone inflation rose to 2.2% in September, the highest since April, driven by services and energy.
Core inflation held steady at 2.3% for the fifth consecutive month, signaling firm underlying price pressures.
Services led price gains with a 3.2% annual rise, while food, alcohol, and tobacco climbed 3.0%.
Non-energy industrial goods stayed flat at 0.8%, and energy prices fell 0.4%, a slower decline than August’s 2.0%.
Estonia recorded the highest inflation at 5.2%, followed by Croatia and Slovakia at 4.6% each.
Cyprus saw no annual change, and France posted a modest increase of 1.1%.
ECB Maintains Rates Amid Steady Core Inflation
The ECB kept interest rates unchanged in September, maintaining the deposit facility at 2.00%.
President Christine Lagarde said the bank remains “in a good place” and sees no urgency to adjust policy.
Economists highlight cooling wage growth, low energy prices, and a stronger euro as reasons inflation should gradually decline.
The ECB expects eurozone inflation to average 2.1% in 2025, drop to 1.7% in 2026, and rise slightly to 1.9% in 2027.
Markets widely anticipate the ECB will hold rates steady at its October 30 meeting.
Analysts view September’s inflation uptick as temporary, reinforcing the decision not to cut rates prematurely.
Euro Strengthens Amid US Shutdown Concerns
The euro rose to 1.1750 against the US dollar after a greenback selloff triggered by the US government shutdown.
The shutdown threatens to furlough hundreds of thousands of workers and delay key economic reports, including Friday’s nonfarm payrolls.
European equities showed mixed results: the EURO STOXX 50, DAX, and CAC 40 gained 0.3%, while Italy’s FTSE MIB fell 0.1%.
The broader EURO STOXX 600 climbed 0.5%, with Sartorius surging 9%, Sanofi up 4%, and Novo Nordisk rising 3.3%.
Defence stocks lagged, as Rheinmetall dropped 2.3%, Leonardo fell 2%, and Thales lost 1.4%.
