Eurozone inflation drops to 4.3% to September, latest figures confirm

(Sharecast News) - Inflation in the Eurozone slowed considerably in September, official figures confirmed on Wednesday, raising hopes that the growth rate in consumer prices should continue to ease closer to the European Central Bank's target in the coming year. In line with its preliminary estimates, Eurostat confirmed that price growth in the euro area fell to 4.3% last month, from 5.2% in August.

Food, alcohol and tobacco inflation eased to 8.8% from 9.7%, while the decline in energy prices accelerated to -4.6% from -3.3%.

Core inflation, which excludes these volatile items, fell to 4.5% from 5.3%.

Economist Melanie Debono from Pantheon Macroeconomics said that last month's data "likely marks the beginning of an accelerated slide in EZ inflation".

While energy prices will begin to rise again, they should be offset by falling food and core inflation, while service-sector inflation should begin to decline over the next six months.

"In all, we look for headline inflation to nearly half by the middle of next year, as it falls to 2.4%, before it continues to decline gradually to 2.0% by year-end," Debono said.

"This leaves our forecast well below the ECB's, adding support to our view that its forecasts will come down further in December, setting the ground up for a likely first policy rate cut in March."