According to Bloomberg's report on September 30 local time, Germany's inflation rate reached a three-year high, further increasing the pressure for the European Central Bank to raise interest rates again.
Data shows that Germany’s consumer price index (CPI) rose by 3.3% in September, higher than the Bloomberg survey's median forecast of 3.2%. Energy prices were a major factor driving up inflation.
Bloomberg analysis indicates that despite Germany’s new reduction of road fuel taxes, inflation is likely to remain above 3% in the coming months. Inflation data in Germany and other eurozone countries are higher than expected, and the European Central Bank may have to raise interest rates once again this year.
Prior to this, data on inflation released by France, Italy, and Spain all exceeded expectations.
Affected by the soaring fuel prices caused by the Iranian conflict, Spain’s inflation rate reached 5%. The overall inflation report for the Eurozone will be released on October 2nd, and economists predict that inflation will rise significantly to 3.7%.
The inflation level in the eurozone is approaching twice the target of 2%, and there is no sign of a decline in the short term. Policy makers are discussing next steps.
Eurozone Major Economies' Inflation Trend Chart - Bloomberg
The European Central Bank has already raised interest rates twice so far. The focus now is on whether there will be another rate hike at the October meeting, or whether officials will wait until December. The updated economic forecasts will provide a clearer picture of the current economic situation.
The Greek Central Bank President Stournaras and the Maltese Central Bank President De Marco, among other dovish officials, have not ruled out the possibility of raising interest rates next month. However, economists and traders do not agree with this view. Currently, the market generally expects the rate hike to be postponed until December.
The President of the European Central Bank, Christine Lagarde, stated on Monday that she supports "adopting moderate measures to curb inflation." She believes that a second round of inflation has not yet occurred, and the global bond sell-off will suppress prices and economic growth.
Reports indicate that at least the German labor market is not booming, and it will be difficult to see significant salary increases in the coming months. In September, labor demand remained low, and even in months when recruitment typically recovers after summer, the number of unemployed people increased.
