Eurozone Inflation Surges Amid Energy Price Shocks

The eurozone inflation rate has surpassed forecasts, fueled by energy price shocks from the Iran conflict. The European Central Bank (ECB) may be forced to raise interest rates again in response.

Inflation rose faster than expected in several major economies, including France, Italy, and Spain. France's harmonized inflation rate was 3.4% year-on-year in September, up from 2.6% in August. In Italy, the rate jumped to 4.1% from August's 3.2%, both above the ECB's 2% target.

German inflation accelerated slightly more than expected, rising to 3.3% year-on-year from 2.9% in the previous month. Energy and food prices contributed significantly to the increase.

Economists polled by Reuters predict that eurozone inflation will come in at 3.6% in September, up from 3.2% in the previous month. Markets expect another four interest rate hikes over the next year, on top of two moves already made this summer.