(Reuters) – Euro zone inflation fell below 2% in September for the first time since mid-2021, strengthening the case for a further cut in interest rates from the European Central Bank (ECB) later this month.
The consumer price index calculated according to European standards (HICP) in the 20 countries sharing the euro decelerated to 1.8% year-on-year last month, a rate identical to the consensus of analysts polled by Reuters, data show. preliminary data published Tuesday by Eurostat.
In August, it had slowed to 2.2%.
Excluding the most volatile elements of unprocessed food products and energy, inflation stood at 2.7% in September, compared to 2.8% the previous month, while the consensus was + 2.7%.
A narrower measure of price rises, which excludes food, energy, alcohol and tobacco, shows that inflation slowed to 2.7% last month, partly due to slower growth in prices for services, against a consensus which expected a stable rate at 2.8%.
Eurozone inflation has been above the ECB’s target for more than three years, as rising energy prices, bottlenecks in the recovery in activity after the COVID-19 pandemic, corporate opportunism and abundant fiscal aid pushed inflation above 10% at the end of 2022.
A record series of interest rate hikes by Frankfurt nevertheless managed to curb price growth relatively quickly, and central bank policymakers are now debating how quickly they should cut borrowing costs further.
The ECB has already cut rates twice in 2024, in June and September, and Christine Lagarde, the ECB president, sent the clearest signal yet on a third cut on Monday, indicating that she could have take place later this month, given encouraging price trends.
Services inflation – the most closely watched component of inflation – slowed slightly in September, falling from 4.1% to 4% and strengthening the case for a further reduction in October, but not easing not completely the fears of a stagnation of price pressures at a high level.
The fall in energy costs remains the main factor of disinflation (-6% in September compared to -3% in August), while the prices of non-energy industrial goods increased by only 0.4% year-on-year. .
(Report by Balazs Koranyi, French version Diana Mandiá, edited by Blandine Hénault and Kate Entringer)
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