People look at the skyline of the banking district with the Commerzbank building (2ndR) during sunset in Frankfurt am Main, West Germany, on September 25, 2023. (Photo by Kirill KUDRYAVTSEV / AFP) (Photo by KIRILL KUDRYAVTSEV/AFP via Getty Images )
Kirill Kudryavtsev | Episode | Getty Images
Eurozone inflation fell to a two-year low of 2.9% in October, down from 4.3% the month before and below a Reuters consensus estimate of 3.1%, according to preliminary data released on Tuesday. survey among economists.
According to the European Union’s statistics agency Eurostat, core inflation – which excludes volatile food and energy prices – fell to 4.2% on an annual basis in October from 4.5% in September.
“Looking at the main components of euro area inflation, food, alcohol and tobacco are expected to have the highest annual rates in October (7.5%, compared to 8.8% in September), followed by services sector (4.6%, compared to 4.7% in September). September), non-energy industrial goods (3.5%, compared to 4.1% in September) and energy (-11.1%, compared to -4.6% in September),” Eurostat said.
The agency also revealed on Tuesday that the eurozone economy shrank 0.1% in the third quarter, according to flash estimates, below consensus estimates of GDP remaining unchanged from the previous quarter.
The ECB expects the eurozone economy to grow by just 0.7% this year, 1% in 2024 and 1.5% in 2025.
Europe’s largest economy, Germany, posted a 0.1% quarter-on-quarter decline in GDP in the third quarter, slightly better than the 0.3% decline forecast in a Reuters poll of economists. Price-adjusted, the economy shrank by 0.8% compared to the same period last year.
Both growth and inflation pictures remain very diverse within the common currency bloc of twenty countries. Latvia recorded the highest quarterly growth in the third quarter at 0.6%, followed by Belgium and Spain with 0.5% and 0.3% respectively. Ireland recorded the highest quarterly decline with 1.8%, followed by Austria with 0.6%.
The eurozone has been struggling with high inflation over the past eighteen months, with the consumer price index peaking at 10.6% in October 2022.
The European Central Bank responded with a series of ten consecutive interest rate increases, bringing the key interest rate to a record high of 4%. Last week, the European Central Bank decided to pause despite upside risks to energy costs from the unfolding war between Israel and Hamas.