Eurozone Inflation Rises to 2.2% in September 2025, Driven by Services Sector

Eurozone annual inflation rose to 2.2% in September 2025, up from 2.0% in August, marking the highest rate since April, according to Eurostat's flash estimate released on October 1. Eurostat Report

The increase was primarily driven by the services sector, which saw an annual inflation rate of 3.2%, up from 3.1% in August. Energy prices also contributed, declining by only 0.4% compared to a 2.0% decrease in the previous month. Core inflation, which excludes volatile items like food and energy, remained steady at 2.3% for the fifth consecutive month, indicating stable underlying price pressures in the eurozone. Eurostat Report

Country-Specific Inflation Data

• Germany: Inflation rose to 2.4% in September from 2.1% in August. Notably, North Rhine-Westphalia, the most populous state, saw its inflation rate increase to 2.3% from 2.0% in August.

• France: Consumer prices increased by 1.1% year-on-year in September, up from 0.8% in August. Service prices, including sectors like healthcare and communications, rose by 2.4%, up from 2.1% in August. Energy prices continued to decline, dropping 4.5% compared to a 6.2% reduction in August.

• Italy: The EU-harmonised consumer price index (HICP) recorded a preliminary rise of 1.3% month-on-month and 1.8% year-on-year in September, slightly exceeding forecasts. Core inflation remained steady at an annual rate of 2.2% on the HICP index.

• Spain: Inflation increased to 3.0% in September, up from 2.7% in August.

Economic Context and Implications

The rise in inflation is largely attributed to a slower decline in energy prices rather than a resurgence in broader price pressures. Core inflation saw only modest increases, offering some reassurance to policymakers. Despite the current inflation uptick, expectations remain that the European Central Bank (ECB) will hold rates steady for the remainder of the year.

The services sector experienced a modest acceleration in growth, reaching an eight-month high according to the HCOB Eurozone Services PMI. The index rose to 51.3 from 50.5 in August, signaling the fourth straight month of expansion. Business confidence improved to an 11-month high, although hiring stalled as companies focused on clearing existing backlogs.

Social and Societal Implications

The increase in inflation, particularly in the services sector, may lead to higher costs for consumers in areas such as healthcare, communications, and other service-related expenses. While the modest rise in inflation suggests a recovering economy, it also indicates that consumers may face increased living costs, which could impact household budgets and spending behaviors.

Background on Eurostat and the ECB

• Eurostat: The statistical office of the European Union, responsible for providing statistical information to the institutions of the European Union to enable comparisons between countries and regions.

• European Central Bank (ECB): The central bank for the eurozone, responsible for monetary policy within the member states. The ECB aims to maintain price stability by keeping inflation rates below, but close to, 2% over the medium term.

Historical Context

The eurozone has experienced fluctuations in inflation rates over the past years. The current rise to 2.2% in September 2025 marks the highest rate since April 2025, indicating a potential shift in the economic landscape.

Conclusion

The recent uptick in eurozone inflation to 2.2% in September 2025, driven primarily by the services sector and a slower decline in energy prices, presents a nuanced picture for policymakers and consumers alike. While core inflation remains stable, indicating steady underlying price pressures, the European Central Bank is expected to maintain its current policy stance, monitoring economic indicators closely in the coming months.