A 0.9% decrease in eurozone inflation to 4.3% in September, attributed to a decline in food inflation and plummeting energy prices, provides an opportunity for the central bank to halt its interest rate increases.
File Photo by Ronald Wittek/EPA-EFE
Sept. 29 (UPI) — Eurozone inflation unexpectedly dropped by 0.9% to 4.3% in September, with 15 out of the 20 euro-using countries experiencing a slowdown in the rate of price increases. The decline in inflation was driven by a decrease in food inflation and a significant reduction in energy prices, according to Eurostat, the European Union’s primary statistical agency.
The annual Consumer Price Index (CPI) decline, revised from 5.2% in August, brings inflation to its lowest level since October 2022. While the rise in food prices slowed by 0.9%, they continued to increase at a significant rate of 8.8%, as indicated by flash estimates from Eurostat.
The decline in energy prices, which has been fluctuating since May, resumed after a slight decrease in August, with energy prices estimated to have dropped by 4.7% in September.
The closely monitored core inflation measure, which excludes volatile items like energy and food, alcohol, and tobacco, decreased to 4.5%, compared to 5.3% in August.
Inflation decelerated across most of the euro area economies, with Germany, Latvia, and Lithuania experiencing declines of over 2%. However, Austria, Cyprus, Ireland, Slovenia, and Spain saw an acceleration in inflation.
Despite a 0.8% and 1.1% increase, respectively, inflation in Cyprus and Spain remained below the eurozone average. France, the second-largest economy in the zone after Germany, managed to reduce headline inflation by just 0.1%, leaving it at an estimated 5.6% in September.
Inflation in Slovakia was more than double the eurozone average at 8.9%, while Slovenia and Croatia both had inflation rates above 7%.
The latest decline in inflation, occurring two weeks after the European Central Bank raised its main refinancing rate by 25 basis points to 4.5%, allows for the possibility of the central bank pausing its tightening of monetary policy. This comes after 10 consecutive interest rate hikes since the bank began raising rates in July 2022.
