Eurozone Inflation Hits Three-Year High Amid Energy Cost Surge

The Eurozone inflation rate has reached its highest level in three years at 3.8% in September, surpassing August's rate of 3.2%. This surge is largely driven by energy costs, which rose to 18.8% last month from 14.3% the previous month. The European Central Bank (ECB) has a two-percent target, and this reading remains well above it.

Energy price increases are expected to stay elevated due to disruptions in fuel supplies caused by the US war against Iran. Core inflation, which strips out volatile energy and food prices, rose to 2.5% last month from 2.4% in August.

Analysts expect one more rate hike before the end of the year, possibly as early as October. The ECB has already hiked rates twice this year in response to the energy shock triggered by the US war on Iran.