A fuel-driven energy rally pushed September inflation in Germany, France, Italy
and Spain above consensus, with Spain at 5%—its highest since 2023. Rising fuel
costs are the main driver and are expected to lift euro-area inflation toward 4%
later this year; economists had penciled in 3.7% for the 21-country euro area in
September, but several national prints this week beat estimates, increasing
upside risk. Market participants say higher inflation could lead to further rate
increases, yet odds of an ECB October hike have eased as the shock remains
concentrated in energy; ECB President Lagarde said the recent global bond-market
sell-off should help temper price pressures.
