Annual inflation in the eurozone cooled to its lowest level since October 2021, falling to 4.3% in September, flash figures showed on Friday, according to CNBC.
That was down from a 5.2% annual reading in August, while month-on-month inflation dipped from 0.5% to 0.3%.
Core inflation — which excludes energy, food, alcohol and tobacco, and is closely watched by monetary policymakers — dropped to 4.5% year-on-year in September from 5.3% in August.
The fresh print comes after the European Central Bank decided to hike interest rates to a record level in September, pegging its key rate at 4%.
The move was described as a “dovish hike” after the ECB also gave its strongest suggestion yet that its governing council feels rates may be at sufficiently high levels to bring inflation to target in the medium term.
The bank’s most recent macroeconomic projections for the euro area project inflation will average 5.6% this year, falling to 3.2% in 2024 and 2.1% in 2025.
Officials have tried to dampen expectations for rate cuts on the horizon, with French central bank Governor Francois Villeroy de Galhau telling CNBC this week that it would be “premature” to bet on when the first cut will come.
The picture remains complicated, with the ECB forecasting a tepid 0.7% economic growth for the bloc this year, followed by 1% and 1.5% over the next two years.
The recent surge in oil prices may also prove a risk to the bank’s inflationary forecasts.
The inflationary picture remains highly divergent between European nations. Annual price rises in Germany, the biggest euro zone economy, remain well above target at 4.3%, as it also struggles with an economic contraction.
Estimates from Eurostat, the EU’s statistics agency, put headline inflation harmonized across euro zone nations at 5.6% in France and 3.2% in Spain for September, as Slovakia and Slovenia suffer with inflation of 8.9% and 7.1%.