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Inflation hits 10pc in the euro area but pace in Ireland moderates

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European Central Bank president Christine Lagarde has pledged to tackle inflation. Photograph: Reuters/Kai Pfaffenbach

European Central Bank president Christine Lagarde has pledged to tackle inflation. Photograph: Reuters/Kai Pfaffenbach

Christine Lagarde, president of the European Central Bank. Photo: Alex Kraus/Bloomberg

Christine Lagarde, president of the European Central Bank. Photo: Alex Kraus/Bloomberg

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European Central Bank president Christine Lagarde has pledged to tackle inflation. Photograph: Reuters/Kai Pfaffenbach

Inflation cross the eurozone hit 10pc for the first time in September in a development likely to build pressure on the European Central Bank to hike interest rates further.

In Ireland the pace of price increases softened, the latest estimates from the European Union’s statistics agency, Eurostat, show. 

In September Irish consumer prices rose 8.6pc, down from 9pc in August and 9.6pc in June and July. The experience of higher prices varies widely across Europe – from 24.2pc annualised inflation in Estonia to 6.2pc in France.

But the euro-area figures will be the main factor in determining the size of the ECB’s next interest rate raise, likely in October, as the bank led by President Christine Lagarde tries to address the price surge.

Consumer prices across the euro area surged 10pc from a year ago in September, data from Eurostat showed on Friday, with energy prices by far the biggest driver, followed at a distance by food.

Even an underlying measure that excludes energy and food hit an all-time high of 4.8pc.

In a statement, the Central Statistics Office (CSO) in Ireland said the biggest element in the Harmonised Index of Consumer Prices (HICP), the standard measure for household inflation, was energy prices which are estimated to have remained the same in the month but up by 38pc since September 2021 in Ireland.

For the eurozone overall, energy prices were up 3.0pc in the month and up by 40.8pc on an annual basis.

Meanwhile in the US, long-term inflation expectations continued to ease in September, helping slightly lift consumer sentiment from the previous month despite growing economic uncertainty.

American consumers expect prices will climb at an annual rate of 2.7pc over the next five to 10 years, the lowest since April 2021, according to the final September reading from the University of Michigan. The initial print for the month was 2.8pc.

Respondents see costs rising 4.7pc over the next year, up slightly from earlier in the month but still near the lowest in a year, data showed.

"Inflation expectations are likely to remain relatively unstable in the months ahead, as this uncertainty is unlikely to wane in the face of continued global pressures on inflation," Joanne Hsu, director of the survey, said in a statement.
 

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