Inflation in the Eurozone is at its peak in three years

Annual inflation in the Eurozone reached 3.8 percent in September, reaching its highest level in the last three years.

This jump, which occurred as the Iran war and the blockade in the straits increased energy costs, strengthened the expectation that the European Central Bank (ECB) will continue to increase interest rates.

According to the leading data published today by Eurostat, the statistical agency of the European Union (EU), quoted by the AFP agency, consumer prices in the 21-member Eurozone increased sharply from 3.2 percent in August.

The announced data also exceeded the 3.7 percent expectation of economists participating in the Bloomberg survey. Inflation in the region last exceeded this level in September 2023, at 4.3 percent.

Price increases significantly above the ECB's 2 percent target increase the pressure on decision-makers.

The bank increased borrowing costs for the first time since 2023 in June against the energy shock caused by the US war on Iran, and last month it increased interest rates for the second time this year.

The main driver of the jump in inflation was the energy item.

According to Eurostat data, the annual increase in energy prices climbed from 14.3 percent in August to 18.8 percent in September.

The price increase in the food and beverage group increased from 1.1 percent in August to 1.4 percent.

Core inflation, which excludes volatile energy and food prices, also increased from 2.4 percent in August to 2.5 percent last month.

Market experts point to the risk of permanent high costs spreading to the general public.

In his evaluation note, ING Chief Economist Bert Colijn commented on the picture with the words: "Since energy prices are expected to remain high, general inflationary pressures are accumulating, although the increase is still mainly due to energy."

Center for Economics and Business Research economist Alex Nairn emphasized that headline data will be decisive for the ECB.

Speaking to AFP, Nairn said, "Although the increase in core inflation remains relatively limited, the direction of the course will be decisive for the ECB, which weighs the risk of a wider reflection of energy costs on prices."

Nairn stated that he expects another interest rate increase before the end of the year, and that the latest data strengthens the possibility of pushing this step to October.