Euro area: Core inflation risks rising – Commerzbank
Commerzbank’s Dr. Vincent Stamer notes that Euro area headline inflation rose to 4.0% in October, its highest level in three years, with the core rate steady at 2.5%. The report highlights broad-based price increases beyond energy and expects higher energy costs to be passed through, pushing core inflation towards or above 3% and potentially forcing an ECB rate hike next year.
Commerzbank's Dr. Vincent Stamer reveals that Euro area headline inflation surged to 4.0% in October, its highest point in three years, with the core rate remaining at 2.5%. The report emphasizes that inflation is spreading across the economy, rather than just energy costs, and anticipates a potential increase in core inflation to 3% or above, possibly prompting an ECB interest rate hike in the coming year.
In October, the inflation rate in the euro area first surpassed the 4% threshold, following its rise to 3.8% in September. This increase was attributed to a broad-based rise in prices across the consumer basket, driven by more expensive energy and higher natural gas costs affecting electricity prices. Companies are expected to raise prices for other goods and services due to the higher energy costs.
Core inflation, while currently at 3%, could surpass 3% by mid-next year, exceeding the ECB's expectations and raising the likelihood of another interest rate hike next year.
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