Inflation across the European Union (EU) reached an annualized rate of 3.8% in September, its highest level in three years.
Consumer prices on the continent rose from 3.2% in August and were above the 3.6% forecast by economists. The last time inflation was this high in Europe was September 2023.
Inflation on the continent is running well ahead of the European Central Bank’s 2% annualized target. Core inflation for September came in at 2.5%, in line with expectations.
The main item driving inflation higher is energy, which is imported into most European countries. Energy prices rose 18.8% year-over-year in September as the Iran war drives prices higher.
Concerns are growing in Europe about energy costs heading into the autumn and winter months when heating homes and businesses will become an issue.
The European Central Bank has raised interest rates twice this year, in June and again in September. Each time, it lifted rates by 25 basis points.
Europe’s key interest rate now stands at 2.50%. The European Central Bank is widely expected to raise rates further at its next meeting on Oct. 29 as it tries to lower inflation.
Related Stories
