Eurozone inflation rises to 4.1% in October, with higher energy prices driving up overall costs

(1) Preliminary data from Eurostat shows that inflation in the Eurozone rose to 4.1% year-on-year in October, up from 3.8% in September, with this round of increase driven entirely by energy prices. (2) Year-on-year energy inflation for October reached 21.2%, marking the highest increase of the year; since the outbreak of geopolitical conflict at the end of February this year, prices of crude oil, natural gas, and household energy have remained elevated. (3) Other subcategories also saw modest increases: service inflation stood at 3.4%, food, alcohol, and tobacco inflation at 1.7%, and non-energy industrial goods inflation at 1.3%, all higher than the previous month. (4) The current overall inflation rate has reached twice the European Central Bank's 2% policy target. The central bank has recently kept interest rates unchanged and predicts that prices will peak by the end of 2026, and will gradually decline as energy prices retreat. (5) Market view: Short-term energy supply disruptions are expected to extend the inflation cooling cycle, making it difficult for the European Central Bank to cut rates quickly, and there remains a possibility of further rate hikes in the future.