Eurozone Inflation Accelerates to 2.2% in September 2025
Consumer prices in the eurozone saw an acceleration in September 2025, reaching an annual rate of 2.2% compared to 2.0% the previous month, according to data released by Eurostat. This increase, following three months of stability at 2.0%, marks a return of inflation above the 2% target set by the European Central Bank. While core inflation remained stable at 2.3%, the rise in prices is primarily due to a slowdown in the decrease of energy costs and sustained growth in the services sector.
Energy and Services Drive Price Increase
The rise in inflation in September is primarily explained by the contrasting trends of its various components. Energy prices decreased by only 0.4% year-over-year, compared to a 2.0% drop in August, according to Eurostat. This slowdown in the reduction of energy costs has mechanically contributed to pushing up the overall inflation. Meanwhile, the services sector recorded the highest inflation rate with a 3.2% increase year-over-year, up from 3.1% the previous month.
This acceleration is partly explained by a calendar effect related to the Paris Olympics, where the temporary downward pressure on French service inflation has dissipated, as highlighted by Riccardo Marcelli Fabiani, economist at Oxford Economics. Prices for food, alcohol, and tobacco rose by 3.0%, a slight deceleration from August's 3.2%, indicating a slowdown in unprocessed food inflation. Industrial goods excluding energy maintained a moderate increase of 0.8%, unchanged from the previous month. On a monthly basis, consumer prices rose by only 0.1% between August and September, matching the pace observed in the prior month, reflecting an inflationary dynamic that remains largely controlled despite the rise in the annual rate.
Significant Disparities Among Member States
Price trends within the eurozone vary significantly from one country to another, revealing starkly contrasting national dynamics. Estonia recorded the highest inflation rate at 5.2% year-on-year, followed by Croatia and Slovakia, each at 4.6%. On the other hand, Cyprus experienced zero inflation, while France posted a particularly moderate rate of 1.1% in September, well below the eurozone average. The low inflation in France is primarily due to reductions in electricity tariffs implemented by the authorities.
Germany, the eurozone’s largest economy, saw its inflation rise to 2.4% in September, with service inflation increasing to 3.4%, surpassing analysts’ expectations according to Goldman Sachs. Italy reported an inflation rate of 1.8%, slightly above consensus predictions, while Spain's rate stood at 3.0%, matching forecasts.
These discrepancies reflect diverse national economic conditions, with each country having its own fiscal policies and consumption structures. Core inflation, which excludes volatile components like energy and food, remained steady at 2.3% for the fifth consecutive month across the eurozone, marking its lowest level since January 2022. This stability in underlying inflation is a reassuring sign for monetary authorities, indicating that fundamental inflationary pressures remain contained.
ECB Stays the Course Despite Rising Inflation
During its meeting on September 11, 2025, the European Central Bank decided to keep its three key interest rates unchanged, with the deposit facility rate staying at 2.00%. The ECB's new forecasts anticipate an average inflation rate of 2.1% in 2025, slowing to 1.7% in 2026, and then rising to 1.9% in 2027. Inflation excluding energy and food is expected to average 2.4% in 2025, then decrease to 1.9% in 2026 and 1.8% in 2027.
Christine Lagarde, President of the ECB, stated that the institution is well-positioned to maintain stable rates, with no urgency to further tighten or ease monetary policy. Economists believe that the slight increase in September should not alter this cautious approach. According to Oxford Economics, the outlook remains unchanged and clearly points toward a decline in inflation due to slowing wage growth, low energy commodity prices, the strength of the euro, and moderated demand-side pressures.
Markets largely anticipate that the ECB's Governing Council will keep rates unchanged at its next meeting scheduled for October 30, 2025, in Florence. Some analysts currently believe that the barrier to further rate cuts remains high, as the institution considers its monetary policy well-positioned. A significant shock would be needed to convince the ECB to make new adjustments, as a gradual cooling of inflation or strengthening of the euro is unlikely to be sufficient.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
