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Euro zone inflation has fallen to its lowest level in nearly two years, boosting hopes that the biggest rise in consumer prices in a generation is quickly fading and paving the way for the European Central Bank to stop raising interest rates.
European government bonds rose while stocks strengthened after better-than-expected regional and French inflation data.
Eurostat data showed consumer prices in the single currency bloc rose 4.3% in the year to September, down from 5.2% in August. Economists polled by Reuters had expected growth of 4.5%.
The last time inflation was lower was in October 2021.
Core inflation, which excludes energy and food and is closely watched by the European Central Bank as a measure of underlying price pressures, also fell more than expected, to 4.5%, down from 5.3% in August.
Compared with the previous month, consumer prices in the region rose 0.3% in September, down from 0.5% in August.
Following Thursday’s turmoil in European bond markets, Italy’s 10-year government bond yield fell 0.15 percentage point to 4.76%, below its highest level in a decade.
Germany’s 10-year government bond yield fell 0.1 percentage point to 2.85%, having also hit a 10-year high in the previous session.
The euro rose 0.4% against the dollar to $1.0603. In the stock market, the Stoxx 600 index in Europe rose 1%, and the German Dax index rose 0.6%. London’s FTSE 100 rose 0.6% and France’s CAC 40 rose 0.7%.
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