EU inflation falls to two-year low of 2.9%

inflation European Central Bank (ECB) President Christine Lagarde attends a press conference following the ECB's monetary policy meeting in Frankfurt, Germany, September 14, 2023. REUTERS/Wolfgang Rattay
European Central Bank President Christine Lagarde is calling for the creation of an EU Securities Exchange Commission - like the one the US has - as inflation slows. Photo: Wolfgang Rattay/Reuters (Wolfgang Rattay / reuters)

Inflation in the eurozone slowed sharply to 2.9% in October, approaching the European Central Bank (ECB) target rate of 2%.

This is the lowest since July 2021 and was mainly driven by a fall in energy prices and a slowdown in food inflation.

Price increases in the services sector and more expensive food, alcohol and tobacco drove inflation in October but a fall in energy prices brought consumer prices growth to a fraction of the double-digit increases recorded in October last year, according to the EU's statistics office.

The cost of energy plunged 11.2% from a year ago in October, accelerating from a 4.6% decline in the prior month.

Food prices gained 7.4% in October compared with the same month last year, easing from September's 8.8% rise.

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Eurostat said consumer inflation in the 20 countries using the euro slowed to 2.9% year-on-year in October from 4.3% in September after prices rose 0.1% month-on-month. A year earlier, the rate was 10.6%.

The lowest annual rates were registered in Belgium (-1.7%), the Netherlands (-1.0%) and Denmark (-0.4%). The highest annual rates were recorded in Hungary (9.6%), Czechia (9.5%) and Romania (8.3%).

Meanwhile, the core rate, which filters out volatile food and energy prices, also cooled to 4.2% in October, marking its lowest point since July 2022.

The European Central Bank president delivered a speech shortly after the figures came out but gave no hints regarding interest rates.

Christine Lagarde said, however, that Europe needs its own version of the US Securities and Exchange Commission (SEC) and a unified stock exchange.

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Supervision of capital markets “remains largely at the national level,” Lagarde said in Frankfurt. A European agency with “a broad mandate including direct supervision,” could help address that problem.

“Creating a European SEC, for example by extending the powers of ESMA, could be the answer” she said, referring to the European Securities & Markets Authority.

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