Inflation rose in Germany, France, Italy and Spain this month, boosting expectations that the eurozone as a whole will exceed 2% in September. The rise eased pressure on the European Central Bank (ECB) to cut interest rates further after a big cut earlier this year.
The rise in inflation was largely driven by a smaller decline in energy prices than in the previous month, while core inflation rose only moderately. This provided some relief to policymakers, although the price environment remains uncertain due to geopolitical, trade and energy factors.
Data showed inflation jumped to 2.4% in Germany, 1.1% in France, 3.0% in Spain and 1.8% in Italy. The readings reinforced expectations that eurozone inflation will be between 2.2% and 2.3% overall, up from 2.0% in August.
However, economists expect the rise to be temporary. Inflation is expected to fall sharply early next year due to statistical base effects, with the ECB itself projecting a reading of 1.7% in 2026, below its 2% target.
However, there is debate among policymakers. Some fear that low inflation could drive weak price expectations, while hawkish parties argue that factors such as higher defense spending and reduced trade integration could sustain inflationary pressures.
