Annual inflation in the euro area rose from 3.2% in August to 3.8% in September, according to the flash estimate published on Friday by Eurostat, the statistical office of the European Union. The figure came in above the 3.6% the market had expected and is the bloc's highest this year. The euro area has had 21 members since 1 January 2026, when Bulgaria joined.
On the month, prices rose 0.6%. Complete September data is due on 16 October.
Almost all of it is energy
The breakdown by component shows where the pressure sits. Over 12 months:
- energy: 18.8%, against 14.3% in August
- services: 3.2%, against 3.0%
- food, alcohol and tobacco: 1.4%, against 1.1%
- non-energy industrial goods: 1.1%, against 1.2%
Core inflation — the measure that strips out energy and food, used to separate demand pressure from a price shock — stood at 2.5%, against 2.4% in August. That is the detail that changes the reading: a 0.6-point jump in the headline index sits alongside a 0.1-point rise in the core, which suggests a shock still concentrated in energy bills rather than a broad pass-through to wages and services.
The source of that shock lies outside Europe. Fighting near the Strait of Hormuz has constrained crude supply and pushed Brent above $100 a barrel, according to market accounts reported by euronews.
Lithuania 6.1%, Latvia 2.9%
The spread between countries remains wide. September's highest rate was Lithuania's, at 6.1%; the lowest, Latvia's, at 2.9%. Among the bloc's four largest economies, Spain recorded 4.9%, Italy 4.2%, Germany 3.3% and France 3.0%.
What the ECB does now
The European Central Bank (ECB) has already responded twice to this shock. On 10 September it raised the deposit rate from 2.25% to 2.5% — its second increase since 11 June — with the main refinancing rate at 2.65% and the marginal lending rate at 2.9%. At the time, the bank kept its 2026 inflation projection at 3.0% and revised up those for 2027 (2.5%) and 2028 (2.1%).
ECB President Christine Lagarde summed up the condition for further moves: "the burden of proof is on data". Friday's figures arrive with market rates already higher — bond yields have risen sharply in recent weeks, tightening financial conditions without the bank touching its policy rate.
The ECB's next monetary policy decision is set for 29 October.
With information from Eurostat, euronews and InvestingLive.
