Euro Area Inflation October 2021

Euro Area: Inflation at over 13-year high in October amid surging energy prices

November 17, 2021

Harmonized inflation came in at 4.1% in October, above September’s 3.4% and marking the highest print since July 2008 as well as the joint-highest reading in series history. Inflation therefore moved further above the European Central Bank’s target rate of 2.0%. October’s result was due to sharper increases in prices for energy and services. Meanwhile, prices for non-energy industrial goods increased at a softer pace than in the previous month, while prices for food, alcohol and tobacco recorded a steady pace of increase.

On a monthly basis, harmonized prices jumped 0.85% in October, above September’s 0.47% increase. Core inflation, which excludes volatile energy and unprocessed foods prices, rose to 2.1% in October from September’s 1.9%, the highest print since December 2008.

Commenting on the short-term outlook for inflation, Bert Colijn, senior economist at ING, stated:

“With inflation above 4% and core inflation above 2%, the breeding ground for second round effects on inflation becomes more fertile. Whether it is fertile enough for inflation to turn structural remains to be seen, but the ECB will have to keep a close eye on it.”

FocusEconomics Consensus Forecast participants expect harmonized inflation to average 1.9% in 2022, which is up 0.3 percentage points from last month’s forecast. For 2023, panelists expect harmonized inflation to average 1.5%.

Author: Massimo Bassetti, Senior Economist

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Euro Area Inflation Chart

Euro Area Inflation October 2021 0

Note: Year-on-year and month-on-month var. of harmonized consumer price index (HICP) in %.
Source: Eurostat

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