More expensive energy and services boost euro zone inflation as expected

More expensive energy and services boosted euro zone inflation as expected in September, data showed on Wednesday, with core inflation also higher.

The European Union’s statistics office Eurostat said consumer prices in the 19 countries using the euro rose 0.5 per cent month-on-month in September for a 3.4 per cent year-on-year rise, as earlier estimated by Eurostat.

While the headline number was well above the European Central Bank’s target of 2 per cent, the overshoot was mainly a result of a 17.6 per cent year-on-year surge in energy prices and a 2.0 per cent rise in the costs of food, alcohol and tobacco.

Without these volatile items, or what the ECB calls core inflation, prices grew 0.4 per cent month-on-month for a 1.9 per cent year-on-year increase, faster than the 1.6 per cent annual rise in August.

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Eurostat said energy prices were responsible for almost half of the overall year-on-year inflation reading, adding 1.63 points to the final result. Services added another 0.72 points and prices of non-energy industrial goods a further 0.57 points.

The ECB expects consumer prices will start easing again in 2022. – Reuters