A projection of the euro currency symbol is photographed on the facade of the European Central Bank (ECB) headquarters in Frankfurt am Main, western Germany, on December 30, 2025.
Kirill Kudryavtsev | AFP | Getty Images
The euro zone’s annual inflation rate rose to 3.8% in September, beating market expectations that it would reach its highest level since September 2023.
Last month’s print rate was up from the 3.2% recorded in August, higher than market expectations of 3.6% and well above the European Central Bank’s 2% target. Core inflation was 2.5%, in line with expectations.
Energy inflation reached 18.8%, the highest level since January 2023, as prices continue to rise due to the ongoing Middle East conflict.
Harry Woolman, global capital markets analyst at Validus Risk Management, said that although energy remains the main driver, September’s rally suggests it is now “more than just energy”, making the next ECB Governing Council meeting on October 29 important.
“Markets have been dialing back expectations for a series of rate hikes in recent days after President Lagarde suggested that rising bond yields were having some effect on ECB tightening. Today’s inflation numbers make that argument difficult to sustain,” Uhlmann said.
“Central banks with the 2022 experience in mind will not want to wait to take action until the effects of the second round are established.”
