Energy lifts euro area price growth to 4 percent, with Belgium well above at 5.2 percent

Inflation in the euro area rose to 4.0 percent in October from 3.8 percent in September, according to Eurostat's flash estimate. According to Briefs Finance, it is the first time since September 2023 that inflation has reached 4 percent or more, and the figure matched the expectations of economists in a Reuters poll. Energy is the main driver: energy prices were 20.8 percent higher than a year earlier, after 18.9 percent in September. According to Business AM, energy accounts for almost half of overall inflation.

Core inflation, which excludes energy and food, held steady at 2.5 percent, Reuters reports. Services became 3.3 percent more expensive, after 3.2 percent, and unprocessed food 4.6 percent. All 21 euro countries are above the 2 percent target, with Lithuania highest at 6.1 percent and Malta lowest at 2.3 percent, writes Briefs Finance. For Belgium, Eurostat arrives at 5.2 percent. Belgian statistics office Statbel previously reported 5.26 percent, a small difference due to the calculation method, Newsmonkey explains.

This adds fresh pressure on the European Central Bank (ECB), which left its deposit rate at 2.5 percent last week. According to Reuters, the heads of the German and Italian central banks have already signalled that another move in December is likely, and markets expect two to three rate hikes over the coming year. The ECB itself expects inflation to stay above 4 percent for much of the first half of 2027. Jack Allen-Reynolds of Capital Economics thinks energy inflation could ease in November if prices stabilise, but expects higher energy costs to feed more clearly into food prices in the coming months, Newsmonkey reports.