Eurozone inflation rises to 4% in October

{"text":[[{"start":6.76,"text":"Eurozone inflation climbed to a three-year high of 4 per cent in October as surging oil and gas prices weighed on households’ spending power."}],[{"start":15.68,"text":"The flash estimate published by Eurostat on Wednesday was up from 3.8 per cent in September and in line with economists’ forecasts in a Reuters poll."}],[{"start":25.36,"text":"Annual energy inflation continued to rise to 20.8 per cent, the highest level since January 2023 and above the 18.9 per cent rate in September."}],[{"start":36.24,"text":"October marked the eighth month in a row that the annual inflation rate in the 21-country bloc was above the European Central Bank’s medium-term target of 2 per cent."}],[{"start":45.76,"text":"ECB president Christine Lagarde last week warned that a bigger and longer energy shock was “likely to drive up inflation and lower growth”. She signalled that policymakers stood ready to increase interest rates by a quarter point at their next meeting in December after keeping them on hold last week."}],[{"start":null,"text":"

"}],[{"start":64,"text":"Annual core inflation, which excludes volatile food and energy prices, remained unchanged at 2.5 per cent, the figures released on Wednesday showed."}],[{"start":73.12,"text":"The closely watched figure for services inflation rose to 3.3 per cent from 3.2 per cent in September. The figure, a gauge of domestic price pressures, has remained well above the ECB’s target for more than three years."}],[{"start":87.32,"text":"“Energy prices were front and centre” in October’s inflation rise, said Moody’s Analytics economist Kamil Kovar, who warned that the hit would continue in the coming months, when “lower wholesale oil and diesel prices will be more than compensated by higher gas and electricity prices”."}],[{"start":104.08,"text":"Kovar said he expected that the ECB would raise interest rates not only in December, but also “likely in March”."}],[{"start":110.84,"text":"Carsten Brzeski, global head of macro at ING, said: “Today’s inflation numbers have brought the central bank one step closer to a December rate hike.” He also pointed to “muted underlying inflationary pressure”, which he saw as an argument that “the December hike could also be the last one”."}],[{"start":128.12,"text":"Analysts at Pantheon Macroeconomics said an impending change of senior figures at the ECB had introduced a “wild card” for next year’s policy outlook."}],[{"start":136.16,"text":"If Lagarde and executive board member Isabel Schnabel were replaced by dovish candidates, the governing council could end up “erring on the side of holding fire” on raising rates beyond 2.75 per cent, they said."}],[{"start":150.56,"text":"The ECB has already increased borrowing costs twice since the start of the US-Iran war in February triggered a surge in oil and gas prices, raising its benchmark rate by a quarter point in June and again in September."}],[{"start":164.64,"text":"Worries over higher inflation and rising public debt triggered a surge in Eurozone borrowing costs in recent weeks, pushing yields of French 10-year government bonds above 5 per cent last month for the first time since 2002. They have since come back down slightly."}],[{"start":180.72,"text":"Stronger-than-expected economic growth could bolster the case for another rate rise. GDP across the 21-country bloc expanded by 0.4 per cent in the third quarter, twice the pace forecast by economists."}],[{"start":194.2,"text":"Traders have fully priced in a quarter-point increase in interest rates to 2.75 per cent by February and attribute a roughly 70 per cent chance to the ECB acting in December."}],[{"start":204.96,"text":"Peder Beck-Friis, economist at Pimco, said ahead of the October inflation data that he expected the ECB to lift rates next month but “the bar for going further looks high without stronger evidence that higher energy prices are generating second-round effects on core inflation”."}],[{"start":222.56,"text":"The euro, which had gained against the dollar since the US midterm election results, was little moved by the inflation figure. The single currency was 0.5 per cent up against the greenback on the day at $1.125."}],[{"start":236.2,"text":"Additional reporting by Ian Smith"}],[{"start":242.63,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1793793454_8250.mp3"}