BRUSSELS / LONDON (IT BOLTWISE) – Inflation in the euro area weakened to 2.1 percent in October, moving closer to the European Central Bank’s target. This development is accompanied by a decline in energy prices and a moderate increase in food prices. The ECB sees its main task as ensuring stable prices and is unlikely to change its key interest rates in December.
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The latest data on inflation in the euro area shows a positive development: in October, the inflation rate fell to 2.1 percent, as the statistical office Eurostat announced in an initial estimate. This means that inflation is approaching the target of the European Central Bank (ECB), which is aiming for a medium-term inflation rate of two percent. This target is crucial for the ECB to ensure stable prices.
Compared to the previous month, when inflation was still at 2.2 percent, the decline in the inflation rate can be attributed to various factors. Particularly noteworthy is the 1.0 percent decline in energy prices, which makes a significant contribution to easing inflation. Prices for food, alcohol and tobacco also rose less sharply in October than in September, which also helped to calm inflation.
However, the core inflation rate, which excludes volatile components such as energy and food, remained at 2.4 percent. This shows that price increases in other areas, especially services, continue. Services prices rose 3.4 percent year-on-year in October, indicating continued demand in the sector.
A look at the individual countries in the Eurozone shows that Estonia recorded the highest inflation with an inflation rate of 4.5 percent, followed by Latvia and Croatia. In contrast, Cyprus, France and Italy had the lowest inflation rates. Inflation in Germany was 2.3 percent in October, which is in line with the expectations of EU statisticians and the German Federal Statistical Office.
In view of these developments, the ECB has decided not to change key interest rates for the time being. No change is expected at the next interest rate meeting in December. This decision reflects the ECB’s confidence that current inflation developments are in line with its long-term objectives.
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