Eurozone inflation hits central bank’s target for first time in over three years

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Subscribe to enjoy similar stories. Eurozone inflation fell below the European Central Bank’s target for the first time in more than three years, suggesting a lengthy struggle to bring price rises under control is nearing an end. Consumer prices increased by 1.8% on year in September across the 20 nations that make up the eurozone, falling from a month earlier and marking the first time since June 2021 that annual inflation has stood below the ECB’s 2% target.

September’s figures suggest policymakers can begin to claim victory in their the two-and-a-half-year battle to tame sky-high inflation that spiked with Russia’s full-scale invasion of Ukraine early in 2022. The resultant energy shock drove consumer prices rapidly higher across Europe and much of the rest of the globe. Soaring inflation, exacerbated by supply squeezes and further geopolitical turbulence, forced central banks into a cycle of tighter monetary policy that took interest rates in many parts of the wealthy world to their highest level since the beginning of the century.

Rate setters have now begun the process of lowering borrowing costs in order to ease some of the burden on investment and consumer spending, with the U.S. Federal Reserve last month joining peers such as the European Central Bank, the Bank of England and the Swiss National Bank in cutting its key rate for the first time in years. Inflation could rise again in the year’s final months as base effects in energy lessen, ECB President Christine Lagarde said Monday.