Eurozone annual inflation hits record 10% in September

Eurozone inflation soared well above expectations to a new record this month, reinforcing expectations of another strong rate hike by the European Central Bank in October.

The rise in prices in the 19 countries that use the euro accelerated to 10.0% in September from a year earlier, from 9.1% a month earlier, Eurostat data showed on Friday. The expectation in a Reuters poll was an increase of 9.7%.

Figures released the day before showed that inflation in Germany, the bloc’s biggest economy, had jumped to the highest rate since the Korean War era 70 years ago.

Inflation was still mainly driven by volatility in energy and food prices, but continued to spread across virtually every category from services to industrial goods, now showing painfully high readings.

This is likely to be uncomfortable for the ECB, which is aiming for a 2% price increase, as it suggests that inflation is increasingly being fueled by excess demand and is in danger of taking root.

Indeed, core inflation, which filters out food and fuel price volatility and is closely monitored by the ECB, also jumped to a new high, heightening the urgency of further rate hikes after strong moves in July and September.

Excluding food and fuel prices, inflation jumped from 5.5% to 6.1%, while an even narrower measure, which also excludes alcohol and tobacco, rose from 4.3% to 4.8%.

Energy prices are up 41% from a year ago, while unprocessed foods are up 13%.

While the next ECB meeting is still nearly a month away, many officials have already advocated another 75 basis point hike after a total move of 125 points in two meetings, the fastest pace of monetary policy tightening by the ECB on record. .

Markets now see the deposit rate, currently at 0.75%, at around 2% by the end of the year.