Eurozone inflation rose to 4.0 percent in October, its highest level in three years, as a sharp surge in energy prices pushed up the cost of living across the 21 countries that share the euro.
FAKTA
- Headline inflation: 4.0% in October 2026, up from 3.8% in September – the highest since September 2023.
- Energy prices: up 20.8% from a year earlier, the biggest rise since December 2022.
- Core inflation: unchanged at 2.5%, in line with expectations.
- Interest rates: markets are pricing in two to three further rate rises to the European Central Bank’s 2.5% deposit rate over the coming year.
- Markets: Asian shares slid on Thursday, with South Korea’s Kospi down about 4.8% and Japan’s Nikkei down about 1.5%.
Energy drives the Eurozone inflation rise
Inflation in the eurozone accelerated to 4.0 percent in October from 3.8 percent in September, flash data from Eurostat showed on Wednesday, 4 November. The figure matched economists’ expectations and was the highest since September 2023, when the rate was 4.3 percent.
Energy prices posted the largest annual increase, climbing 20.8 percent, as continued fighting in the Middle East pushed up the cost of oil and gas. Services inflation, the largest item in the consumer price basket, rose to 3.3 percent from 3.2 percent, and unprocessed food prices rose 4.6 percent from 4.0 percent.
Inflation across the eurozone
The picture varied sharply between the bloc’s largest economies. Inflation accelerated in France, Italy and the Netherlands, while it eased in Germany and Spain.
| Country | October 2026 | September 2026 |
|---|---|---|
| Germany | 2.8% | 3.3% |
| France | 3.8% | 3.4% |
| Italy | 5.6% | 4.2% |
| Spain | 4.9% | 5.0% |
| Netherlands | 3.3% | 3.0% |
Germany’s inflation rate eased partly because of a temporary fuel tax cut, while Italy saw the sharpest acceleration, from 4.2 percent to 5.6 percent. In Belgium, inflation reached 5.2 percent in October, according to Eurostat.
What it means for interest rates
The figures are likely to firm up market bets on another European Central Bank rate rise in December. Headline inflation is clearly higher than in the ECB’s baseline scenario from September, ING economist Carsten Brzeski said, strengthening the case for another rise.
However, muted underlying price pressures suggest the December rise could also be the last one, Brzeski added. Core inflation, which strips out volatile food and energy prices, held steady at 2.5 percent, and economists noted that energy inflation has so far produced only limited second-round effects on other prices.
The ECB now expects inflation to hold above 4 percent for much of the first half of 2027 before falling quickly towards the low twos, when high year-earlier figures drop out of the annual comparison.
The Frankfurt Stock Exchange. European markets are pricing in further interest rate rises from the European Central Bank after inflation hit a three-year high.
Markets slide in Asia
Asian markets split sharply on Thursday as investors rotated out of artificial intelligence and chip stocks. South Korea’s Kospi fell about 4.8 percent, with selling heavy enough to trigger a halt in programme trading, and Japan’s Nikkei fell about 1.5 percent. US tech futures also slid, while gold extended its rise to around $4,135 an ounce.
Brent crude, which had traded near $119 a barrel in October, fell to about $93.65 a barrel on Thursday, offering some relief to energy importers but underlining how volatile markets have become.
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Conclusion
Eurozone inflation at 4.0 percent is a reminder that the cost-of-living squeeze is far from over. Energy prices are driving the rise, the ECB is expected to raise rates again in December, and households and businesses across Europe face months of higher prices before inflation is expected to ease in 2027.
