FRANKFURT- Euro zone inflation zoomed past forecasts to hit 10.0 percent in September, a new record high that will reinforce expectations for another jumbo interest rate hike next month from the European Central Bank.
Price growth in the 19 countries sharing the euro accelerated from August’s 9.1 percent, data from Eurostat showed on Friday, beating expectations for a reading of 9.7 percent, with some euro zone members experiencing the fastest price growth since the time of the Korean War 70 years ago.
Inflation was still driven mainly by volatile energy and food prices but continued to broaden out, with virtually all categories, from services to industrial goods, now showing painfully high readings.
That is likely to make uncomfortable reading for the ECB, which targets price growth of 2 percent, as it suggests that inflation is increasingly being fuelled by excess demand and is at risk of becoming entrenched.
“The September reading for inflation is ugly across the board with all broad categories experiencing accelerating inflation,” ING economist Bert Colijn said. “This seals the deal on another 75 basis point hike from the European Central Bank in October.”
Underlying inflation, which filters out volatile food and fuel prices and is closely watched by the ECB, also jumped to a fresh high, adding to the urgency for more rate hikes after oversized moves in July and September.
Excluding food and fuel prices, inflation jumped to 6.1 percent from 5.5 percent while an even narrower measure, which also excludes alcohol and tobacco, rose to 4.8 percent from 4.3 percent.
Energy prices were meanwhile up 41 percent compared to a year ago. Unprocessed food was up 13 percent.
