Eurozone September Inflation Expected to Rise to 3.7%, Hitting Three-Year High; ECB May Hike Again Before Year-End
nashnova research
Eurozone September CPI is forecast at 3.7% year-on-year, the highest since 2023, driven by Middle East energy-cost pressures; the ECB may hike again as early as October, but a key hawk's departure is reinforcing bets that December will end the tightening cycle.
Where is the 3.7% coming from?
A Bloomberg survey of economists puts eurozone September CPI at 3.7% YoY, up from 3.2% in August — the highest since 2023.
The main driver: Middle East tensions keep pushing energy costs higher → headline inflation accelerates.
Country-level data from Germany, France, Italy and Spain are all expected to rise in tandem. Spain reports first on Tuesday; the eurozone aggregate lands next Friday.
Why is core inflation still relatively calm?
Core CPI — stripping out energy and food — is forecast at just 2.5%, up marginally from 2.4%.
This means → the energy price shock has not yet spread into the broader price system for everyday goods and services; the hit remains on the surface.
In plain terms = petrol is more expensive, but rents, dining and clothing have not followed — giving the ECB a thin cushion of breathing room.
What is the ECB likely to do next?
The ECB has already hiked 25 basis points each in June and September, and is laying the groundwork for further tightening — as early as October.
This batch of inflation data is the last hard print before the October 28-29 policy meeting; policymakers will use it directly to set the tone.
Simona Delle Chiaie, Bloomberg Economics' chief eurozone economist, expects the final hike to land in December, bringing the policy rate into a "mildly restrictive range."
What does the hawk's departure signal?
Executive Board member Isabel Schnabel announced she will leave in early January to join the IMF.
She was one of the ECB's most prominent hawkish voices; her exit coincides with a broader leadership transition.
This means → the hawkish camp loses weight, and the market's conviction that "December is the endpoint" grows stronger.
What is the key variable going forward?
The ECB expects inflation will not return to the 2% target until end-2027 — still a long way off.
Delle Chiaie notes that unless energy prices spike again sharply, or there is clear evidence of the shock feeding into core inflation, hikes will stop after December.
In plain terms = the base script is "one more hike, then hold." But if oil surges again — or everyday prices start catching up — the script gets rewritten.
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