Germany's headline inflation quickened to 3.3% year over year in September, a touch above the 3.2% consensus from a Bloomberg survey. Energy prices did most of the heavy lifting. A national measure of underlying inflation stayed unchanged at 2.4%, signaling limited spillover so far.
What Bloomberg Economics says: "Surging energy prices drove German headline inflation to 3.3% in September and may keep it above 3% in the coming months despite renewed road-fuel tax cuts. Pass-through to core inflation appears limited so far, with the measure likely unchanged from August. Stronger-than-expected price gains in Germany and other euro-area countries strengthen our view that the ECB will raise interest rates once more this year." - Martin Ademmer
Germany's print arrived alongside stronger-than-expected headline figures in France, Italy and Spain. Fuel costs tied to the Iran war pushed Spain's inflation to 5%. The euro-area report lands Oct. 2, and economists see the aggregate rate rising to 3.7%. With the bloc's inflation tracking near double the 2% objective and little immediate relief in sight, the question is whether the ECB tightens again soon or waits for more data.
The ECB has already raised rates twice, and the live debate is whether to move again at the October meeting or hold off until December, when fresh forecasts should offer a clearer read on growth and prices. Two officials viewed as on the dovish side - Greece's Yannis Stournaras and Malta's Alexander Demarco - aren't dismissing an October hike. Markets and economists lean toward December. President Christine Lagarde endorsed a "measured response as appropriate to keep inflation in check." She also said there are no second-round effects so far and argued that the global bond selloff will restrain both prices and activity.
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Germany's jobs backdrop offers little fuel for pay surges. Hiring demand stayed soft in September, and unemployment increased in a month that usually sees activity pick up after summer.
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