Eurozone Inflation Hits 3.8%, Highest Since 2023

The Eurozone inflation rate has reached its highest level since 2023, exceeding expectations in September at 3.8%. Energy prices are still driving this increase, with Euro 95 petrol reaching an all-time high despite oil prices remaining below their peaks seen in 2022 and earlier this year.

Despite higher energy costs not yet passing through to other categories as much as expected, there are signs of increased inflation in food and core prices. Food inflation rose from 1.1% to 1.4%, while core inflation increased from 2.4% to 2.5%. However, these numbers remain lower than in June.

ECB President Christine Lagarde expressed surprise at the limited impact of energy costs on other prices, but also noted that wage growth is increasing, which could lead to second-round effects.