Eurozone inflation delivered another unwelcome surprise today, accelerating sharply to 3.8% in September 2026, up from 3.2% in August 2026 and significantly above economists’ expectations of around 3.6%.
The figure puts inflation at almost double the European Central Bank’s 2% target.
Energy concerns
The main culprit was energy. Energy prices were 18.8% higher than a year earlier, compared with a 14.3% increase in August. Services inflation also accelerated to 3.2%, while food, alcohol and tobacco prices rose 1.4%.
More encouragingly, underlying EU inflation remained considerably more contained. Core inflation, which strips out volatile food and energy prices, edged up from 2.4% to 2.5%. This suggests that, so far, the energy shock has not fully translated into broader price pressures.
ECB headache
Nevertheless, today’s figures create another headache for the ECB. Higher energy costs risk feeding through into wages and other prices, while already elevated borrowing costs are putting pressure on businesses, governments and households.
The ECB now faces a difficult balancing act: raising interest rates could help contain secondary inflationary pressures, but could also weaken an economy already facing higher energy costs and financial uncertainty.