FRANKFURT (Reuters ). In September, eurozone inflation fell to its lowest level in two years, indicating that the European Central Bank’s steady diet of interest rate rises was successful in containing runaway prices, but at an increasing cost to economic development.
According to Eurostat’s flash estimate issued on Friday, consumer prices in the eurozone’s 20 member nations grew by 4.3 percent in September, the weakest rate since October 2021, down from 5.2% the previous month.
Inflation excluding food, energy, alcohol, and tobacco, which the ECB regularly monitors as a better indicator of the underlying trend, decreased to 4.5% from 5.3%, the largest decline since August 2020.
These results were probably going to confirm the ECB’s belief that it had increased interest rates sufficiently to reduce inflation to its 2% objective by 2025 after being caught off guard by a rise that began in 2021.
Last autumn, as a result of a combination of rising energy prices, supply chain problems following the epidemic, and increased government expenditure, price increases momentarily reached double digit levels.
After a decade of seeking to boost inflation through an ultra-easy monetary policy, the ECB responded by raising its benchmark interest rate to a record-high of 4.0% from a low of minus 0.5% in less than a year. This turned off the money faucets.
All categories of growth grew more slowly in September, while energy prices dropped outright for the first time since July.