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Eurozone Inflation Falls to 1.8% in September, Lowest Since 2021
Inflation across the eurozone dropped to 1.8% in September, according to data released by Eurostat on Tuesday. This marks a significant decline from August’s 2.2% and falls below analysts’ predictions of 1.9%. It is also the lowest inflation figure recorded since April 2021, bringing the rate below the European Central Bank’s (ECB) 2% target for the first time in over two years.
The main driver of the decrease was falling energy prices, which plummeted by 6% in September, compared to a 3% decline in August. Additionally, services inflation slightly eased to 4%, down from 4.1% the previous month. However, inflation in food, tobacco, and alcohol saw a minor uptick, rising to 2.4% in September from 2.3% in August. Core inflation, excluding volatile items like energy, food, and tobacco, fell to 2.7% from 2.8%.
Among the eurozone’s major economies, inflation figures reflected a broad decline. French inflation plunged to 1.5% in September from 2.2% in August, while Spain saw its rate drop to 1.7% from 2.4%. Italy and Germany also experienced decreases, with inflation rates of 0.8% and 1.8%, respectively.
ECB Cautiously Optimistic Despite Decline
Despite the positive inflation news, experts warn that the eurozone’s economy is not entirely out of trouble. The ECB has forecasted that inflation may rise again in the coming months due to stabilizing energy prices. In September, the central bank cut interest rates to 3.50%, and further cuts could be on the horizon as policymakers strive to balance inflation control with economic recovery.
FX analyst Kyle Chapman noted, “After a series of sub-2% inflation prints from the bloc’s largest economies, eurozone-wide CPI dipped to 1.8% in September. The ECB’s doves now have a strong case to argue for consecutive rate cuts as disinflation is in its late stages.”
However, some ECB officials remain cautious, pointing to stubbornly high services inflation as a reason for potential pauses in policy adjustments.
Challenges Ahead for Eurozone Economy
Ilya Volkov, CEO of crypto financial firm YouHodler, emphasized that deeper economic issues persist. He highlighted rising unemployment in Germany and France’s mounting national debt as key challenges for the eurozone. “The ECB’s rate cuts appear to be a desperate measure to control the situation,” Volkov said, adding that more structural reforms are needed to sustain long-term growth.
As the ECB prepares for its next meeting, the focus will likely shift to addressing both inflation trends and the broader economic outlook for the region.
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