Euro-area inflation rate climbs above 2% on energy cost

Bloomberg

Euro-area inflation accelerated in September amid a surge in energy costs, while underlying price moves remained more subdued.
The core measure of inflation, which strips out volatile energy and food, fell to 0.9 percent from 1 percent. That’s a blow to European Central Bank President Mario Draghi, who just this week cited faster wage growth and a “relatively vigorous” pick-up in underlying price pressures.
The euro extended its decline after the report, ignoring an oil price-led pickup in the headline inflation measure to 2.1 percent. That’s above the ECB’s goal.
An energy-fuelled surge in consumer-price growth is likely to complicate the central bank’s exit from unconventional stimulus.
While headline inflation is the ECB’s official guidepost, policy makers have paid more attention to the core rate in recent years as it better reflects domestic fundamentals.
“There’s simply no convincing sign of underlying price pressures rising despite strengthening wage growth,” said Oliver Rakau, chief German economist
at Oxford Economics in Frankfurt.
“That won’t halt the ECB’s plans to end QE purchases at the end of the year, but if core inflation fails to rise from its subdued pace in the coming months, markets will start to increasingly question the timing of the first interest rate hike.”