Eurozone inflation climbed to 2.2% in September, driven by rising service and energy costs.
Core inflation held steady at 2.3%, signaling underlying price pressures remain firm.
Monthly prices increased 0.1%, matching August’s pace, while services rose 3.2% annually.
Food, alcohol, and tobacco prices increased 3.0%, down from 3.2%, while non-energy goods stayed at 0.8%.
Energy prices fell 0.4%, slowing from August’s 2.0% decline.
Estonia recorded the highest inflation at 5.2%, followed by Croatia and Slovakia at 4.6%; Cyprus saw no change.
ECB Maintains Rates Amid Rising Prices
The ECB kept interest rates steady in September, leaving the deposit facility at 2.00%.
Projections forecast inflation at 2.1% in 2025, falling to 1.7% in 2026, then rising slightly to 1.9% in 2027.
President Christine Lagarde affirmed the bank has no urgency to tighten or ease policy.
Economists noted inflation remains on a downward path, supported by lower energy prices, wage moderation, and contained demand.
The September inflation uptick reinforces the ECB’s stance that cutting rates now would be premature.
Markets expect the ECB to hold rates steady at its next meeting on October 30.
Dollar Weakens as US Shutdown Concerns Grow
The euro climbed to 1.1750 against the US dollar amid fears of a US federal government shutdown.
Shutdown risks threaten furloughs and delay key data, including Friday’s nonfarm payrolls report.
European markets showed mixed movements: EURO STOXX 50, DAX, and CAC 40 gained 0.3%, Italy’s FTSE MIB slipped 0.1%, and EURO STOXX 600 rose 0.5%.
Individual stock movers included Sartorius up 9%, Sanofi up 4%, and Novo Nordisk up 3.3%.
Defence companies lagged: Rheinmetall fell 2.3%, Leonardo dropped 2%, and Thales lost 1.4%.
