Summary Eurozone inflation rose to 3.8% in September, a three-year high, as sharply higher fuel prices amid Hormuz tensions increased pressure on consumers and policymakers.
LONDON (Dunya News) - Inflation across the eurozone accelerated sharply in September, reaching its highest level in three years as rising energy costs linked to tensions around the Strait of Hormuz put renewed pressure on consumers and policymakers.
Inflation in the 21 countries using the euro rose to 3.8% in September, up from 3.2% in August, according to the European Union’s statistics agency. The latest figure was also higher than economists’ forecast of 3.7%.
The increase has been linked primarily to a sharp rise in fuel prices amid continuing disruption and tensions surrounding the Strait of Hormuz, a major global route for oil and gas shipments.
Fuel prices were 18.8% higher year-on-year in September, compared with a 14.3% increase recorded in August. The acceleration in energy costs also contributed to higher prices for food and beverages, with inflation in the category rising from 1.1% to 1.4%.
The latest figures mark a significant reversal in the eurozone’s recent inflation trend. Inflation was last recorded above the September level in September 2023, when it stood at 4.3%.
Core inflation, which excludes volatile components such as energy and food, also edged higher. It rose to 2.5% in September, compared with 2.4% in August.
The renewed increase in consumer prices presents another challenge for the European Central Bank (ECB), which has a medium-term inflation target of around 2%.
Higher energy costs can feed into a wider range of goods and services by increasing transportation, production and operating expenses. Businesses may pass part of these additional costs on to consumers, potentially keeping inflation elevated.
The development is particularly significant for European economies because the Strait of Hormuz is an important international energy shipping route. Prolonged disruption to energy supplies can affect global oil and gas prices and increase inflationary pressures in economies that depend heavily on imported energy.
The latest inflation data could therefore complicate monetary policy decisions in the eurozone. While higher inflation can increase pressure for tighter monetary policy, policymakers must also consider the effect of elevated energy costs on economic activity and household spending.
For consumers, the immediate impact is likely to be felt through higher fuel and food costs, while businesses face increased expenses across supply chains.
