Eurozone Inflation Rises to 2.2% in September, ECB Holds Rates Steady

In September 2025, the eurozone's annual inflation rate increased to 2.2%, up from 2.0% in August, according to Eurostat. This rise was primarily driven by a 3.2% increase in services and a 3.0% rise in food, alcohol, and tobacco prices. Energy prices declined by 0.4%, a slower decrease compared to the 2.0% drop in August. Core inflation, which excludes volatile items like food and energy, remained steady at 2.3%.

Among member states, Estonia recorded the highest annual inflation at 5.2%, followed by Croatia and Slovakia at 4.6% each. In contrast, Cyprus experienced no annual change, and France saw a modest increase of 1.1%.

The European Central Bank (ECB) maintained its deposit facility rate at 2.00% during its September meeting. Projections indicate that inflation is expected to average 2.1% in 2025, decrease to 1.7% in 2026, and slightly rise to 1.9% in 2027.

The rise in inflation, particularly in essential sectors like services and food, alcohol, and tobacco, may impact household purchasing power, especially for lower-income families. The ECB's decision to maintain interest rates suggests a cautious approach, balancing the need to control inflation without stifling economic growth.

The ECB is the central bank for the eurozone, responsible for monetary policy and maintaining price stability. Its primary objective is to keep inflation rates below, but close to, 2% over the medium term.

The current inflation rate of 2.2% is slightly above the ECB's target but remains within a manageable range. The ECB's decision to hold interest rates steady reflects confidence in the eurozone's economic resilience despite global uncertainties.

The eurozone's inflation uptick to 2.2% in September 2025 presents a nuanced challenge for the ECB as it strives to balance inflation control with economic growth. The bank's decision to maintain interest rates reflects a cautious approach amid economic uncertainties. Monitoring future inflation trends and economic indicators will be crucial for informing the ECB's monetary policy decisions.