Eurozone Inflation Accelerates to 3.8% in September Amid Energy Surge
Eurozone inflation accelerated to 3.8% in September, driven by energy prices surging 18.8% amid fallout from the war in Iran, putting pressure on the ECB.
Eurozone inflation accelerated to 3.8% year-on-year in September, reaching its highest level since September 2023, up from 3.2% in August. Core inflation, which excludes energy, food, alcohol, and tobacco prices, rose to 2.5%, compared to 2.4% in the previous month.
The sharp rise in inflation is primarily driven by energy prices, which surged by 18.8% compared to September of last year, following an annual increase of 14.3% in August, against the backdrop of the fallout from the war in Iran. This spike in inflation may increase pressure on the European Central Bank to raise interest rates in an attempt to prevent further price pressures from becoming entrenched in the economy. According to estimates, the central bank may raise interest rates by a quarter of a percentage point to 2.75% by the end of the year. Inflation in the 21 countries using the common currency has remained above the central bank's 2% target for the seventh consecutive month.
Meanwhile, according to a Reuters report, European Union member states discussed a French proposal today (Friday) to release diesel reserves in response to American pressure and rising fuel prices. Under the proposal, 50 million barrels of diesel will be released from member states' inventories. Global diesel supply has been hit by the war in Iran, the Russian export ban following Ukrainian strikes on Russian refineries, and the decision by Chinese refineries this month to freeze fuel exports in order to boost domestic reserves.
