Euro Zone Inflation Surges on Energy Price Shocks

The European Central Bank is facing pressure to raise interest rates again due to soaring inflation in several euro zone countries. Inflation rose faster than expected in France, Italy, and Germany this month, driven by energy price shocks from the Iran war.

France's harmonized inflation rate was 3.4% year-on-year in September, while Italy's jumped to 4.1%, both above the ECB's 2% target. German inflation accelerated slightly more than expected to 3.3% year-on-year.

Economists say energy prices are unlikely to fall soon, and the dollar's recent strength will make imports even more expensive in local currencies.

Markets expect another four interest rate hikes over the next year, on top of two moves already made this summer.