Eurozone inflation at five-month high will keep ECB on hold
Higher costs of energy and air fares will have pushed up price growth
[LONDON] Eurozone inflation probably jumped to a five-month high in September, a reading that may reinforce policymakers’ resolve to avoid cutting interest rates again for now.
Consumer prices rose 2.2 per cent from a year earlier, according to the median forecast of 35 economists surveyed by Bloomberg. Those data on Wednesday will follow national reports that may also show a pickup in each of the four biggest euro-area members.
Such an increase in the headline inflation rate, from 2 per cent in August, would be the biggest this year. Higher costs of energy and air fares will have pushed up price growth, according to Bloomberg Economics, whose prediction matches the median.
Fluctuations in inflation are par for the course, and the factors involved are typically those that the European Central Bank (ECB) looks through. Even so, a pickup above the 2 per cent target is likely to embolden officials to follow through with no change in borrowing costs next month. This is the last inflation reading that they will see before their Oct 30 decision.
The outcome will follow national readings, starting on Monday with Spain. Price growth there is predicted by economists to jump to 3 per cent from 2.7 per cent in August.
The following day, inflation in France is predicted at 1.3 per cent, also accelerating markedly, while outcomes anticipated at 1.8 per cent in Italy and 2.2 per cent in Germany would show slight quickening too.
ECB officials were unanimous in keeping rates unchanged in September, and seem wholly content to do so in October too. The next major juncture for their decision-making, therefore, is likely to be in December, when they will have new quarterly forecasts available.
Aside from the data due, the coming week is on track to be one of the most intense for appearances by ECB policymakers. Two-thirds of the Governing Council are set to speak, some more than once.
Highlights include a conference on Tuesday in Finland featuring President Christine Lagarde and other policymakers, and another with multiple global attendees on Friday in Amsterdam to mark the exit of Dutch Governor Klaas Knot. BLOOMBERG
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