- The euro zone’s annual inflation rate cooled to its lowest level since October 2021, falling to 4.3% in September, flash figures showed on Friday.
- The figures for August were 5.2% annually, showing a 0.5% increase from the previous month.
- The relaunch comes after the European Central Bank decided in September to raise interest rates to record levels and set its base rate at 4%.
Fresh fruit is displayed at a vegetable stand in an indoor market in central Madrid, Spain, on Wednesday, August 30, 2023.
Bloomberg | Bloomberg | Getty Images
The annual inflation rate in the euro zone cooled to its lowest level since October 2021, falling to 4.3% in September. lightning Numbers showed on Friday.
That was down from the annual rate of 5.2% in August, while inflation fell to 0.3% month-on-month from 0.5%.
Core inflation – which excludes energy, food, alcohol and tobacco and is closely watched by monetary policymakers – fell to 4.5% year-on-year in September from 5.3% in August.
The relaunch comes after the European Central Bank decided in September to raise interest rates to record levels and set its base rate at 4%.
The move was described as a “loose interest rate hike” after the ECB also made its strongest indication yet that its Governing Council believes interest rates could be at a sufficiently high level to bring inflation to target levels over the medium term .
The bank’s latest macroeconomic forecasts for the euro area expect inflation to average 5.6% this year, falling to 3.2% in 2024 and 2.1% in 2025.
Officials have sought to dampen expectations of impending interest rate cuts, with French Central Bank Governor Francois Villeroy de Galhau telling CNBC this week that it was “premature” to bet on when the first rate cut would come.
The picture remains complicated: The ECB forecasts weak economic growth of 0.7% for the Union this year, followed by 1% and 1.5% in the next two years.
The recent rise in oil prices could also prove to be a risk to the bank’s inflation forecasts.
The inflation picture remains very different between European countries. The annual price increase in Germany, the euro zone’s largest economy, remains well above target at 4.3% as the country is also struggling with an economic downturn.
Estimates from Eurostat, the EU’s statistics agency, put harmonized headline inflation in Eurozone countries at 5.6% in France and 3.2% in Spain in September, while Slovakia and Slovenia had inflation of 8.9%. or 7.1% suffer.