Eurozone inflation jumped to 2.2% in September, its highest level in five months, Eurostat reported.
Services prices led the increase with a 3.2% annual rise, slightly above August’s 3.1%.
Food, alcohol, and tobacco rose 3.0%, non-energy goods stayed at 0.8%, and energy fell 0.4%.
Core inflation remained steady at 2.3% for the fifth consecutive month, showing stable underlying pressures.
Estonia recorded the highest inflation at 5.2%, while Cyprus saw no annual change.
Italy and Portugal led monthly increases at 1.3% and 1.0%, highlighting localized acceleration.
ECB Maintains Wait-and-See Approach
The ECB left interest rates unchanged in September, keeping the deposit facility at 2.00%.
Projections show inflation averaging 2.1% in 2025, falling to 1.7% in 2026, then rising to 1.9% in 2027.
President Christine Lagarde stated the bank sees no urgent need to tighten or ease policy further.
Oxford Economics’ Riccardo Marcelli Fabiani said cooling wages, low energy, and contained demand support declining inflation.
He added the September uptick reinforces the ECB’s view that rate cuts remain premature.
Markets expect the ECB to maintain its policy stance at the October 30 meeting.
US Shutdown Weighs on Markets
The euro rose to 1.1750 against the dollar as investors reacted to a US federal government shutdown.
The shutdown threatens to furlough workers and delay key economic data, including Friday’s nonfarm payroll report.
European equity markets showed mixed results: EURO STOXX 50, DAX, and CAC 40 gained 0.3%, Italy’s FTSE MIB fell 0.1%, and EURO STOXX 600 rose 0.5%.
Sartorius led individual gains with a 9% surge, followed by Sanofi at 4% and Novo Nordisk at 3.3%.
Defence stocks lagged: Rheinmetall dropped 2.3%, Leonardo fell 2%, and Thales lost 1.4%.
