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Eurozone inflation has fallen to its lowest level for almost two years, bolstering hopes that the biggest surge in consumer prices for a generation is fading fast and paving the way for the European Central Bank to halt interest rate rises.
European government bonds rallied after the better than expected figures for regional and French inflation were published, while equity markets strengthened.
Consumer prices in the single currency bloc rose 4.3 per cent in the year to September, down from 5.2 per cent in August, according to Eurostat, the EU statistics arm. Economists polled by Reuters had expected a rise of 4.5 per cent.
The last time inflation was lower was in October 2021.
Core inflation, which excludes energy and food and is closely watched by the ECB as a gauge of underlying price pressures, also fell more than expected to 4.5 per cent, down from 5.3 per cent in August.
Compared with the previous month, consumer prices in the bloc rose 0.3 per cent in September, a slower monthly pace than in August when they rose 0.5 per cent.
Following turmoil on European bond markets on Thursday, Italian 10-year government bond yields fell 0.15 percentage points to 4.76 per cent on Friday, down from their highest level in a decade.
German 10-year bond yields slipped 0.1 percentage points to 2.85 per cent, having also hit a 10-year high during the previous trading session.
The euro strengthened 0.4 per cent against the dollar to $1.0603. In equity markets, Europe’s region-wide Stoxx 600 added 1 per cent and Germany’s Dax rose 0.6 per cent. London’s FTSE 100 rose 0.6 per, while France’s Cac 40 index gained 0.7 per cent.
This is a developing story
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