Euro Area Inflation September 2022

Euro Area: Inflation rises to new series high in September

September 30, 2022

Harmonized inflation jumped to 10.0% in September from August’s 9.1% reading, moving further above the European Central Bank’s target rate of 2.0% and marking the highest print in the series’ history. September’s result was due to faster increases in the prices for energy, food, alcohol and tobacco, non-energy industrial goods and services.

On a monthly basis, harmonized consumer prices rose 1.3% in September, above August’s 0.6%. The annual rate of core inflation, which excludes volatile energy and unprocessed foods prices, rose to 6.1% in September from August’s 5.5%—also marking the highest print since records began.

Commenting on the implications for the ECB’s monetary policy stance, Bert Colijn, senior economist at ING, noted:

“The differences in inflation between countries are becoming more significant [...]. The divergence between countries would normally complicate the picture for the ECB, but with current high inflation rates the trajectory is clear: the ECB is set to hike drastically at the coming meetings to get to neutral and possibly beyond quickly.”

Our panel sees inflation averaging 8.1% in 2022, which is up 0.4 percentage points from last month’s estimate, before declining to 5.1% in 2023.

Author: Massimo Bassetti, Senior Economist

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