EU Inflation Hits 2.2% — Highest Level Since April, What’s Driving the Spike?

Brussels - October 9, 2025 – Euro area inflation edged higher to 2.2% in September, marking the highest reading since April and signaling a potential pause in the European Central Bank's rate-cutting cycle, according to the latest flash estimate from Eurostat.

The uptick from August's 2.0% figure reflects a modest rebound in energy prices, which saw deflation narrow from -2.0% to -0.4% year-on-year. Services inflation, the largest component of the Harmonised Index of Consumer Prices (HICP), climbed to 3.2% from 3.1%, while food, alcohol, and tobacco prices eased slightly to 3.0%. Non-energy industrial goods held steady at 0.8%. This brings the euro area's annual inflation rate back to the level seen in April 2025, after dipping to 1.9% in May and stabilizing around 2.0% through the summer months.

The data, released on October 1, underscores a fragile balance in the bloc's post-pandemic recovery. Earlier in 2025, inflation had cooled from peaks above 10% in late 2022, but persistent pressures in services—driven by wage growth and labor shortages—continue to weigh on policymakers. The ECB, which has slashed its deposit rate by 75 basis points since June to 3.25%, faces growing scrutiny over its next moves. Markets now price in a 75% chance of a 25-basis-point cut at the October 17 meeting, though the uptick could temper expectations for further easing.

For the broader European Union, which includes non-eurozone members like Poland and Sweden, August's rate stood at 2.4%, unchanged from July. Full September figures for the EU-27 are pending, but analysts anticipate a similar trajectory, potentially hovering around 2.5% amid divergent national trends—Hungary at 4.5% and Denmark at 1.2%.

"This modest increase keeps inflation within striking distance of the ECB's 2% target, but the rebound in energy underscores vulnerabilities tied to global commodity swings," said economist Maria Rossi of the Bruegel think tank. Projections from the ECB's September staff forecasts still see average inflation at 2.1% for 2025, dipping to 1.7% in 2026 before rising to 1.9% in 2027.

As households brace for winter heating costs and businesses eye borrowing expenses, the data arrives amid broader economic headwinds, including sluggish German growth and U.S. tariff threats. For now, the eurozone's inflation pulse beats a little faster, reminding markets that the battle against price stability is far from won.