Eurozone annual inflation hits ECB target as it rises to 2% in October

The euro area annual inflation rate was 2% in October 2024, up from 1.7% in September. A year earlier, the rate was 2.9%, according to data published by Eurostat, the statistical office of the European Union.

Meanwhile, European Union annual inflation was 2.3% in October, up from 2.1% in September this year. A year earlier, the rate was 3.6%.

Eurostat noted in a press release on its website that the lowest annual rates were registered in Slovenia (0.0%), Lithuania and Ireland (both 0.1%). The highest annual rates were recorded in Romania (5.0%), Belgium and Estonia (both 4.5%). Compared with September 2024, annual inflation fell in two member States, remained stable in six and rose in nineteen.

“In October 2024, the highest contribution to the annual euro area inflation rate came from services (+1.77 percentage points, pp), followed by food, alcohol & tobacco (+0.56 pp), non-energy industrial goods (+0.13 pp) and energy (-0.45 pp),” Eurostat also highlighted.

Could this impact ECB policies?

As previously reported by Euronews’ Piero Cingari, the ECB may not be taken aback by October’s figures, since policymakers had anticipated a temporary increase in inflation during the final months of 2024. 

In its October bulletin, Cingari noted, the ECB reaffirmed its expectation of a near-term inflationary uptick before a gradual decline toward its 2% target in the course of next year.

“The ECB has noted that domestic inflation pressures remain high, driven by wage growth, which continues at an elevated pace. However, it anticipates a gradual easing in labour cost pressures, with corporate profits expected to absorb part of the cost increases, ultimately mitigating their impact on overall inflation.

“During its latest meeting in October, the ECB reiterated its commitment to a “data-dependent and meeting-by-meeting” approach to future policy decisions,” market analyst Cingari also noted.

With inflation still within target, the ECB may feel pressured to maintain its gradual approach to policy normalisation in its final meeting of the year in December.