Source: Sharecast
Consumer price inflation increased to 4% from 3.8% in September. This was the highest inflation rate since September 2023 and above expectations of 3.9%.
Energy inflation rose to 20.8% in October from 18.9% the month before, while services inflation was 3.3%, up from 3.2%. Food, alcohol and tobacco inflation rose to 1.6% from 1.3%.
Core inflation - which excludes food and energy prices - was unchanged at 2.5%.
Axel Rudolph, chief technical analyst at IG, said: "Europe’s energy-driven inflation problem is becoming harder for the ECB to ignore. Headline price growth is now twice its 2% target and, with higher energy costs still feeding through the economy, the peak may not yet be in sight.
"Stable core inflation offers some reassurance, but policymakers will be wary of allowing another energy shock to become embedded in price expectations. A December rate hike is looking increasingly likely, although the ECB will be hoping that higher borrowing costs can contain inflation without doing too much damage to an already fragile economy."
Carsten Brzeski, global head of macro at ING, said the inflation print actually provides both hawkish and dovish arguments for the European Central Bank.
"Headline inflation is clearly higher than in the ECB’s baseline scenario from September, strengthening the case for another rate hike. At the same time, subdued core inflation points to very limited pass-through from higher energy prices to the rest of the economy and argues against overly aggressive hikes," he said.
"Given ECB President Christine Lagarde’s comments at last week’s press conference and the fact the ‘direction of travel is clear’, today’s inflation numbers have brought the central bank one step closer to a December rate hike. Muted underlying inflationary pressure, at the same time, confirms our view that the December hike could also be the last one."