Eurozone inflation hits record high of 10% in September

Eurozone inflation hit a fresh record high in September, according to preliminary figures released on Friday by Eurostat, adding to expectations of another big rate hike from the European Central Bank.

Annual inflation in the bloc rose to 10.0% from 9.1% in August, coming in above consensus expectations of 9.7%.

The data showed that energy inflation rose to 40.8% in September from 38.6% the month before, while food, alcohol and tobacco inflation ticked up to 11.8% from 10.6%.

Meanwhile, the core rate of inflation pushed up to a fresh record high of 4.8% from 4.3% in August. This was mostly due to the expiry of the temporarily reduced rail fare in Germany.

Jessica Hinds, senior Europe economist at Capital Economics, said: "The jump in the eurozone’s headline inflation rate in September into double digits will be of grave concern to the ECB. Despite the weak economic outlook, we expect the Bank to prioritise inflation and deliver another bumper rate hike next month."

Hinds expects inflation to rise further in the coming months as the surge in gas prices in August feeds through to energy inflation with a lag, while services inflation also picks up further.

"The latter is driven mainly by developments in wage growth and we expect the tight labour market to keep upward pressure on pay settlements," she said.

ING economist Bert Colijn said the inflation data "seals the deal on another 75 basis point hike from the European Central Bank in October".

"While an increase was expected due to Germany reversing the nine euro public transport ticket measure from this summer, this jump was more broad-based than expected and will provide extra fuel for ECB hawks as we head into the October meeting," he said.

Separate figures from Eurostat showed that the eurozone unemployment rate was steady at 6.6% in August.