Inflation slowed sharply in Germany

Consumer prices in Germany increased by 2.8 percent on an annual basis in October. There was a 3.3 percent increase in inflation in September. Bloomberg analysts had made a median estimate of 3.1 percent. On a monthly basis, inflation decreased by 0.1 percent in October.

Economists predict that Eurozone inflation will reach 3.9 percent, to be announced next week, and that this level will be approximately twice the target of the European Central Bank (ECB).

Policymakers discussed the risk of widening price pressures at this week's interest rate meeting and discussed whether a rate hike is necessary. As a result, they decided to gather more information, refraining from taking action before the final meeting of 2026 in December.

A third quarter-point increase will likely be necessary unless the outlook improves, sources said. Such a step would increase the deposit interest rate to 2.75 percent, and this level could slightly suppress demand.

ECB President Christine Lagarde said yesterday that the ECB does not currently see a "significant risk" of second-round inflation effects, but acknowledged that the longer energy prices remain high, the more likely these effects will occur.

Bundesbank President Joachim Nagel told Bloomberg that prices may continue to rise in the coming weeks, with the increase in energy costs being the main factor.

While oil prices have jumped since the beginning of September, natural gas prices have reached their highest level in nearly four years.