Eurozone inflation hits 4%, a three-year high, as energy drives half

What happened. By Eurostat's first estimate, euro area prices rose 4.0% on the year in October 2026. September was 3.8%, a year ago 2.1%. Prices rose 0.4% in one month. Euronews says it is the highest level since September 2023 and matched economists' forecast.

What got pricier. Energy: up 20.8% on the year after 18.9% in September, and up 1.4% in the month. It is about 9% of the basket, but by Euronews' math it made up almost half of total inflation. Services rose 3.3%, food, alcohol and tobacco 1.6%, non-energy goods 1.2%. Fresh food (fruit, vegetables, meat) rose 4.6%.

What did not. Core inflation, meaning prices without energy, food, alcohol and tobacco, held at 2.5%. The ECB watches it to see if costly energy is spreading through the economy. So far it is not.

Where it is highest. Lithuania 6.1%, Bulgaria 6.0%, Greece and Italy 5.6% each, Cyprus 5.4%, Belgium 5.2%. Lowest are Malta at 2.3%, Germany at 2.8% and Slovakia at 2.9%. German prices even fell 0.1% in the month: a fuel tax cut runs there from October 1 to the end of the year (Euronews).

What it means for rates. On October 29 the ECB kept its deposit rate at 2.5%, after hikes in June and September. Economists at Oxford Economics and Pantheon, quoted by Euronews, expect a 0.25 point hike in December. Prediction markets put that at about 84%, per Euronews. These are expectations, not a decision.

What we do not know. This is a flash estimate, full data comes on November 18. How long energy prices stay high. Whether higher prices feed into wages and rents.

Confirmed facts

• Euro area annual inflation was 4.0% in October 2026 by the flash estimate, up from 3.8% in September.^[1]
• Energy prices rose 20.8% on the year, up from 18.9% in September.^[1]
• Inflation without energy, food, alcohol and tobacco held at 2.5%.^[1]
• Services rose 3.3%, food, alcohol and tobacco 1.6%.^[1]
• Italy 5.6% from 4.2%, Germany 2.8% from 3.3%.^[1][2]
• It is the highest level since September 2023.^[2]
• The ECB held its deposit rate at 2.5% on October 29.^[2]
• Eurostat publishes full October data on November 18.^[1]

Implications

• ConfirmedInflation is twice the ECB's 2% target.
• Our readingA December ECB rate hike is now more likely. That is economists' expectation, not a decision.
• Our readingFor now the rise rests on energy while core inflation is flat. If core starts rising, the ECB will likely keep hiking longer. That is our reading.

Still unknown

• Whether the full data on November 18 changes the flash estimate
• Whether the ECB raises rates on December 17
• How long energy prices stay high

Who it affects

Euro area. People in the euro area, borrowers, savers and euro investors

Sources

1. Eurostat: Euro area annual inflation up to 4.0% November 4, 2026 · official
2. Euronews: Eurozone inflation hits 4%: Where prices jumped the most November 4, 2026 · media