Euro area annual inflation is expected to reach 2 percent in October 2024, up from 1.7 percent in September, according to a flash estimate released on Thursday by Eurostat.
The services sector recorded the highest annual inflation rate at 3.9 percent in October, maintaining its level from September, according to the European Union’s (EU) statistical office.
Bert Colijn, a senior analyst at ING, observed that inflation rose slightly more than anticipated in October, primarily driven by higher energy and food prices.
Food, alcohol, and tobacco saw an annual inflation rate of 2.9 percent, up from 2.4 percent in September. Energy prices, though still in decline, recorded a slower contraction in October, down 4.6 percent compared to a 6.1 percent decrease in the previous month.
Inflation for non-energy industrial goods showed a slight increase, from 0.4 percent in September to 0.5 percent in October.
Among EU member states, Belgium reported the highest year-on-year inflation rate at 4.7 percent, up from 4.3 percent the previous month, followed by Estonia at 4.5 percent. On the lower end, Slovenia had the lowest inflation rate at 0 percent, while Lithuania and Ireland both registered rates of 0.1 percent in October.
In the major economies, Germany’s inflation rate was 2.4 percent in October, rising from 1.8 percent in September. France’s inflation stood at 1.5 percent, while Spain recorded 1.8 percent.
Colijn attributed the increase in inflation in the eurozone to a strong job market. A separate report from Eurostat, also released Thursday, noted that euro area unemployment was 6.3 percent in September, “a historic low since the eurozone was established in 1999,” according to Colijn.
Despite encouraging signals like Wednesday’s higher GDP growth figures, “we see a eurozone economy that continues to struggle to rebound, with third-quarter GDP data overstating momentum due to one-off factors,” Colijn said. He added that this mixed economic outlook leaves the European Central Bank with challenging decisions ahead regarding potential rate cuts.