Preliminary data published by Eurostat showed that the eurozone annual inflation accelerated in October, exceeding experts' forecasts and returning to ECB's target level (2%). Meanwhile, core inflation unexpectedly stabilized in October.
According to the report, the consumer price index rose by 2.0% per year after increasing by 1.7% per year in September. Economists had expected growth of 1.9% per annum. Meanwhile, on a monthly basis, the consumer price index rose 0.3%, offsetting the September decline (-0.1%) and exceeding forecasts (+0.1%).
Eurostat reported that the core consumer price index - excluding energy, food, alcohol & tobacco - rose by 2.7% per year, as in September. Consensus estimates suggested an increase of 2.6%.
The data showed that the annual growth of the overall consumer price index was due to an increase in the cost of services (+3.9% vs. +3.9% in September), food, alcohol & tobacco (+2.9% vs. +2.4%) and non-energy industrial goods (+0.5% vs. 0.4%). Meanwhile, energy prices fell by 4.6% after declining by 6.1% in September.
Overall, today's data confirm the need for caution in easing the ECB's monetary policy, as price growth is not yet fully tamed. However, recent comments from ECB policymakers indicated that a rate cut at the December meeting is almost guaranteed if new data confirmed current forecasts. Experts also warn that the US elections are likely to create the greatest uncertainty, as they can significantly affect the prospects for trade, economic growth and inflation and may require additional policy measures.