Following the strong monetary policy tightening, eurozone inflation dropped to its lowest level in nearly two years in September. According to Eurostat’s final data issued last Wednesday, harmonised inflation was 4.3 per cent in September, down from 5.2 per cent in August.
Core prices, which exclude food, alcohol, tobacco and energy, increased 4.5 per cent year-on-year (YoY), with services accounting for the majority of the increase. Meanwhile, energy prices have fallen compared to the same period last year.
Slower overall inflation may persuade the European Central Bank to hold interest rates steady, bringing an end to a long cycle of rate hikes. However, eurozone inflation is still not consistent with underlying monetary and price stability, Italian central bank governor Ignazio Visco said on Wednesday. Meanwhile in the UK, inflation held steady in September at 6.7 per cent as rising fuel costs offset the first monthly decline in food prices in two years. The headline consumer price index grew as expected by 0.5 per cent on a monthly basis. Reuters polled economists predicted an annual rate of 6.6 per cent and a monthly increase of 0.5 per cent.
Food and non-alcoholic beverages contributed the most to keeping inflation under control, as their prices fell month-on-month for the first time since September 2021, the Office for National Statistics said on Wednesday. Rising fuel prices contributed the most to the headline rate’s increase.
Headline inflation is also expected to fall sharply next month due to a cut in the cap on home energy prices and better YoY comparisons. Food price declines month on month, which analysts forecast to continue, should also relieve pricing pressures.
Core prices in the eurozone, which exclude food, alcohol, tobacco and energy, increased 4.5% year-on-year, with services accounting for the majority of the increase
Finally in the US, despite strikes in the car industry limiting motor vehicle
manufacturing, factory output in the US increased more than expected in September, providing more support so that the economy exited the third quarter with momentum.
An index of US industrial production surged to its highest level in nearly five years in September, led by strength in the mining and manufacturing sectors. According to Federal Reserve data released on Tuesday, the index rose 0.3 per cent to 103.6, the highest since December 2018.
Manufacturing output, excluding mining and utilities, increased 0.4 per cent from a month earlier. The September industrial production result exceeded the median expectation of economists surveyed by MarketWatch. However, due to sharp revisions to data since the summer months, the industrial production index was only modestly higher than the level reported last month.
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