Euro Zone Inflation Surges on Energy Price Shock

Inflation in the euro zone surged higher than expected in September, driven by the shock of the Iran war on energy prices. France's harmonized inflation rate jumped to 3.4% year-on-year from August's 2.6%, while Italy saw its rate rise to 4.1% from 3.2%. German inflation accelerated slightly more than forecast, reaching 3.3% year-on-year.

Core inflation, which excludes energy and food prices, remained unchanged for the third consecutive month at 2.4%. Energy and food price increases were higher than expected in all countries that have reported so far, according to J.P. Morgan's Mariana Monteiro.

The European Central Bank (ECB) had predicted inflation would accelerate from 3.3% in the third quarter to 3.6% in the final three months of the year. However, economists now expect a peak closer to 4%, given current energy costs.