Euro zone inflation rate rises to 2.1 percent

According to Eurostat’s flash estimate, the inflation rate in the euro zone stood at 2.1 percent in September compared with 2.0 percent in August. This is the fourth month in a row that the inflation rate has remained above the European Central Bank’s inflation target of „near to, but below two percent“. This shows once again that domestic price pressure is still weak. The core rate, i.e. the rate excluding prices for unprocessed food and energy goods, even declined slightly in September. The usual suspects, i.e. prices for energy goods and food, were responsible for the rise in aggregate inflation.

At country level, the HICP (Harmonised Index of Consumer Prices), the European inflation rate, varied. According to national flash estimates that were available, the annual rate of consumer prices in Germany rose from 1.9 to 2.2 percent. In Italy it remained unchanged at 1.6 percent. In France and Spain, by contrast, it fell slightly by in each case 0.1 percentage points to 2.5 and 2.2 per cent respectively.

The fact that the main stimulus for consumer price inflation in September came from food and energy is in line with our forecast. The price development of industrial goods and services has been showing only moderate growth for months now. The price of oil even cleared the USD 80 mark recently. If it remains at this level, the energy component should continue nudging up the inflation rate in the coming months. There are also unlikely to be any reductions in food prices due to expected crop failures as a result of the long drought in Europe this summer. We therefore still expect inflation rates of around 2.0 percent by the middle of next year. The annual average inflation rate in the euro zone for 2018 and 2019 is estimated to lie at 1.8 percent.

Rate this article


Thank you for your rating. Your vote:
There is no rating yet. Be the first! Current average rating: 5.00

Leave an answer

Your e-mail address will not be published. Required fields are marked *