Eurozone inflation rose to 2.2% in September, its highest since April, fuelled by services and energy.
Core inflation remained steady at 2.3%, showing persistent underlying pressures across the region.
Eurostat reported prices increased 0.1% month-on-month, repeating August’s pace.
Services recorded a 3.2% rise, slightly higher than August’s 3.1%.
Food, alcohol, and tobacco prices climbed 3.0%, easing from 3.2% the previous month.
Non-energy industrial goods stayed flat at 0.8%, while energy prices fell 0.4%, softening their August decline of 2.0%.
Estonia led with 5.2% inflation, while Croatia and Slovakia posted 4.6%.
Cyprus recorded no annual change, while France marked a mild 1.1% increase.
Italy and Portugal led monthly gains with 1.3% and 1.0%, highlighting local accelerations.
ECB Maintains Steady Approach
The ECB kept interest rates unchanged in September, holding the deposit facility at 2.00%.
Forecasts show inflation averaging 2.1% in 2025 and easing to 1.7% in 2026.
Rates could remain steady as inflation is expected to settle near 1.9% in 2027.
Christine Lagarde said the ECB feels “in a good place” to hold rates unchanged.
Oxford Economics’ Riccardo Marcelli Fabiani noted inflation remains on track to descend gradually.
He said the September uptick supports the ECB’s view that cutting rates remains premature.
Markets expect the Governing Council to keep rates steady at its October 30 meeting.
Cooling wage growth, weaker energy costs, and a stronger euro all support easing pressures.
Analysts agree demand-side factors remain contained, reinforcing the ECB’s cautious stance.
Dollar Weakens as Markets React to US Shutdown Risk
The euro climbed to 1.1750 against the dollar after a broader selloff in the greenback.
US shutdown risks weighed on Wall Street futures, lowering investor sentiment across markets.
Delays in economic data, including Friday’s jobs report, threatened to cloud near-term outlooks.
The EURO STOXX 50, Germany’s DAX, and France’s CAC 40 each rose 0.3%.
Italy’s FTSE MIB slipped 0.1%, while the EURO STOXX 600 outperformed with a 0.5% gain.
Sartorius surged 9%, Sanofi rose 4%, and Novo Nordisk gained 3.3%, leading winners.
Defence stocks underperformed, with Rheinmetall down 2.3%, Leonardo falling 2%, and Thales losing 1.4%.
Equities stayed muted overall as traders weighed US fiscal risks.
Investors continued shifting focus toward Europe’s inflation outlook and central bank policy stance.
