Inflation in the euro zone slowed significantly in September, to 1.8% over one year, its lowest level in three and a half years, thanks to the fall in energy prices, according to figures published Tuesday by Eurostat.
The increase in consumer prices thus falls below the 2% mark, the objective set by the European Central Bank (ECB), for the first time since June 2021. This decline could encourage the monetary institution to reduce once again its interest rates from October.
Looking at the main components of eurozone inflation, services would see the highest annual rate in September (4.0%, compared to 4.1% in August), followed by food, alcohol and tobacco (2.4%, compared to 2.3% in August), industrial goods excluding energy (0.4%, stable compared to August) and energy (-6.0%, compared to -3, 0% in August).
The rise in consumer prices divided by six
Overall, the increase in consumer prices in the euro zone has been almost divided by six 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 a further reduction on September 12 and could continue the movement from its next monetary policy meeting on October 17, according to analysts.
