Euro inflation is rising again

The inflation rate in the euro area rose to 2.0% in October.

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Dr Vincent Stamer

Commerzbank Economic Research

10/31/2024

The surprisingly strong downward trend of recent months has thus been halted for the time being. The core inflation rate excluding energy, food and beverages remained constant at 2.7%. Inflation is likely to continue to rise until the end of the year. The ECB will not be dissuaded from its course and will cut key interest rates by 25 basis points in December.

Inflation increases temporarily

According to preliminary data from Eurostat, the inflation rate rose to 2.0% in October (from 1.7% in September). The consensus among economists was 1.9%. Inflation rose particularly sharply in the volatile energy prices (from -6.1% in September to -4.6%). The core inflation rate excluding the prices of energy, food and beverages remained constant at 2.7% and thus surprised slightly on the upside.

Inflation is likely to continue to rise until the end of the year. This is also due to base effects stemming from lower energy prices in the autumn of 2023. This effect is already having an impact on energy prices in October and is likely to increase significantly in the coming months. This effect will also occur in November for the less volatile core rate. Inflation is therefore likely to rise sharply in November. Inflation will not fall again until next year. The weak economy in the winter months could then dampen inflation.

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