Eurozone inflation rises to 4% in October, driven by rising energy prices

The annual inflation rate in the eurozone reached its highest level since autumn 2023 in October. Preliminary data published on Wednesday by Eurostat show an upward trend that specialists warn could continue amid rising energy costs, Reuters reports.

According to Eurostat, inflation rose to 4% in October across the 21 countries that use the euro, up from 3.8% in September. The increase is almost entirely attributable to higher energy prices, driven by rising oil and natural gas prices as well as increased refining margins.

Energy prices recorded an annual increase of 20.8% in October, exceeding the 18.9% rise recorded the previous month. Analysts had forecast an inflation rate of exactly 4% ahead of the data release.

Core inflation, which excludes volatile food and energy prices, remained stable at 2.5%. Services inflation, however, edged up slightly from 3.2% to 3.3%.

What lies ahead for ECB interest rates

The inflation trajectory is putting additional pressure on the European Central Bank (ECB), which may decide to raise interest rates again, potentially as early as December. Financial markets are anticipating two to three rate increases from the ECB during the course of 2027.

According to ECB projections, the annual inflation rate in the eurozone will remain above the 4% threshold throughout the first half of 2027, before beginning to decline only towards the end of that year.

It should be noted that the data published by Eurostat on Wednesday are preliminary. A revised version, which will also include inflation figures for the European Union as a whole, is due to be published on 18 November.