FX.co ★ Eurozone Inflation Eases To 1.7% In September

In September, inflation within the Eurozone decreased slightly more than initially projected, leading to heightened anticipation of a quarter-point interest rate reduction by the European Central Bank, expected later today.

Eurostat's finalized data released on Thursday revealed that the harmonized index of consumer prices experienced an annual rise of 1.7 percent in September, revised from the 1.8 percent estimation announced on October 1. The previous month saw inflation at 2.2 percent.

For the first time since June 2021, inflation dipped below the 2 percent target.

Core inflation, which excludes volatile elements such as energy, food, alcohol, and tobacco, softened to 2.7 percent, aligning with earlier estimates, down from 2.8 percent the prior month.

On a month-on-month scale, the HICP declined by 0.1 percent, in line with predictions.

Breaking down the HICP components: energy prices saw a significant annual drop of 6.1 percent, following a 3.0 percent decline in August. Conversely, prices for food, alcohol, and tobacco increased marginally faster, at 2.4 percent compared to a 2.3 percent rise previously. Meanwhile, services inflation decreased to 3.9 percent from 4.1 percent, and the growth in non-energy industrial goods prices remained constant at 0.4 percent.

Today, the European Central Bank is broadly anticipated to reduce its key interest rates in response to increased concerns regarding the economic growth outlook amidst declining inflation rates. The bank is expected to reduce the key rates by 25 basis points, following a similar cut last month.