Eurozone inflation hits three-year high at 4 pct in October

FRANKFURT

Eurozone inflation climbed to a three-year high of 4.0 percent in October as the Middle East war fuelled a surge in energy costs, official data showed on Nov.4.

The figure for the 21-country euro area was up from 3.8 percent in September and remains well above the European Central Bank's two-percent target.

The October reading was in line with the forecast by economists for Bloomberg.

Analysts said they expected another interest rate increase by the ECB this year following the data's release.

"Concerns about the high level of inflation look set to prompt the ECB to raise interest rates again in December, but we suspect that will be the end of the tightening cycle," Jack Allen-Reynolds of Capital Economics said.

The ECB last week kept its benchmark interest rate on hold but opened the door to another hike in December.

Inflation in the single currency area was last above 4.0 percent in September 2023, when it stood at 4.3 percent.

Energy price increases surged to 20.8 percent in October, up from 18.9 percent a month earlier, Eurostat said.

Core inflation, which strips out volatile energy and food prices, remained stable at 2.5 percent last month.

Meanwhile, food and drinks inflation increased to 1.6 percent in October from 1.3 percent in September.

Allen-Reynolds said the indirect effects of higher energy costs on food and core inflation remained "very small".

But he said "we suspect that the impact of higher energy costs will feed through to food and core inflation more noticeably in the coming months".