Eurozone Inflation Accelerates Amid Energy Shock, Raising Interest Rate Hopes

Inflation in the eurozone accelerated significantly in September due to an energy shock caused by the Iran war, increasing pressure on the European Central Bank (ECB) to raise interest rates again.

The ECB has already raised interest rates twice this year to combat rising prices, but investors now expect even more hikes. This would further complicate economic conditions and increase borrowing costs for states at a time when governments are already facing high yields on government bonds.

In France, the harmonized inflation rate rose to 3.4 percent year-on-year in September, up from 2.6 percent in August, while in Italy it jumped to 4.1 percent from 3.2 percent. In Germany, inflation accelerated slightly more than expected to 3.3 percent annually in September.

Energy price inflation exceeded expectations in all countries that have published data so far, and food price growth has also been somewhat higher, according to JP Morgan's Mariana Monteiro.