Preliminary figures showed inflation in the Eurozone fell again to 1.8% in September, from 2.2% in August, as energy prices continued to fall. This marks the first time in three years that headline inflation has fallen below the European Central Bank’s (ECB) 2%-3% target, says UOB Group economist Lee Sue Ann.
Energy prices continue to fall
“Eurozone inflation fell to 1.8% in September, from 2.2% in August, falling below the ECB’s 2% target, according to preliminary data. Core inflation, which excludes the most volatile prices of energy, food, alcohol and tobacco, stood at 2.7%.”
“While we are aware that the risk of a rate cut in October certainly looks more likely than before, we maintain our view that the ECB will only cut again when policymakers meet in December for the last time this year.”
“We believe that the widely observed services inflation, which fell only slightly to 4.0% in September, from 4.1% in August, remains high for the ECB. Furthermore, the inflation dynamics are quite different among the countries of the Eurozone.”
Source: Fx Street
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