ECB President Lagarde said euro-area headline inflation was 4% in October, above
expectations a few months ago but in line with market pricing. The increase is
largely energy-driven: energy inflation rose to 20.8% in October from 18.9% in
September, reflecting the Middle East conflict and weaker global refining
capacity; food inflation also picked up. Core inflation excluding energy, food,
alcohol and tobacco remained 2.5%, unchanged from September; services inflation
edged up to 3.3% but stayed within its four-month range. Lagarde said detailed
breakdowns are not yet available and will be needed to assess whether services
inflation stems from energy-intensive sectors such as transport or from broader
indirect pass-through. She warned inflation is likely to remain elevated over
the coming quarters, and that higher, more persistent inflation raises risks to
the ECB’s medium-term target.
