Euro zone: inflation rebounds more than expected in October, to 2%

Euro zone: inflation rebounds more than expected in October, to 2%
Euro zone: inflation rebounds more than expected in October, to 2%

This acceleration in inflation comes after two months of slowdown. The price increase reached 2.2% in August, after 2.6% in July.

Inflation in the euro zone rose more than expected in October, to 2% year-on-year, driven by food prices, after reaching its lowest level in three and a half years the previous month, according to published figures. Thursday by Eurostat.

The rise in consumer prices remains at the target level set by the European Central Bank (ECB). However, it is a little more pronounced than expected.

Analysts from Factset and Bloomberg expected on average an increase of 1.9%, after 1.7% in September.

This acceleration in inflation comes after two months of slowdown. The price increase reached 2.2% in August, after 2.6% in July.

Core inflation – that is to say corrected for volatile energy and food prices -, particularly scrutinized by the financial markets and the ECB, also remained stable in October, at 2.7% year-on-year, according to the European Statistics Office.

Analysts rather anticipated a slight decline to 2.6%.

The rebound in inflation in October is mainly explained by an acceleration in food prices (including alcohol and tobacco). They increased by 2.9% over one year, after 2.4% in September.

Energy prices, including those of fuel at the pump, fell less than the previous month (-4.6% compared to -6.1%).

The increase in service prices, however, remained stable at 3.9% while inflation for industrial goods remained contained although increasing slightly, at 0.5% after 0.4% in September.

Overall, the rise in consumer prices in the euro zone has been divided by five since the record of 10.6% over one year reached in October 2022, when energy prices were soaring in the context of the war in Ukraine .

This trend allowed the ECB to start easing its monetary policy again in the spring.

To stem inflation, the monetary institution had increased borrowing costs at an unprecedented rate from July 2022, at the cost of a sharp slowdown in economic growth.

On June 6, it lowered its key rates, offering a first breath of fresh air to revive real estate credit and business loans. It made further reductions on September 12, then on October 17.

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