Euro area – Inflation rollercoaster briefly below 2%

The inflation rollercoaster falls below the 2% mark,...

According to preliminary data from Eurostat, the inflation rate fell significantly to 1.8% in September (from 2.2% in August). The economists surveyed in advance had expected this (Table 1). As in the previous month, the significant fall in inflation was mainly due to a further fall in energy prices (from -3.0% in July to -6.0%). The core inflation rate, excluding the volatile prices of energy, food and luxury foods, fell only slightly to 2.7%, in line with expectations. Due to the persistently high price increases for services (4.0% in September), the core inflation rate is likely to remain well above the ECB's target in the coming quarters.

Last Friday, France (from 2.2% to 1.5%) and Spain (from 2.4% to 1.7%) had already published their inflation rates according to the EU harmonization procedure. Inflation rates in these countries have not only fallen significantly, but have also clearly fallen short of economists' expectations. However, this has not happened to the same extent in the euro area as a whole. This suggests that special effects in France and Spain – such as the absence of the Olympic effect in France – have influenced the picture.

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