EUROZONE DATA: CPI Jumps to +10% y/y, Supporting a 75bp Hike

EUROZONE SEP FLASH CPI +1.2% M/M (FCST +0.9%); AUG +0.6% M/M

EUROZONE SEP FLASH CPI +10.0% Y/Y (FCST +9.7%); AUG +9.1% Y/Y

EUROZONE SEP FLASH CORE CPI +1.0% M/M, +4.8% Y/Y (FCST +4.7%); AUG +4.3% Y/Y

• An sharp 0.9pp surge in headline inflation brought euro area inflation to a fresh record high of +10.0% y/y in the September flash, outpacing forecasts by 0.3pp.
• Of particular concern to the ECB will be the core print, which accelerated by half a point to +4.8% y/y, jumping +1.0% m/m alone. Almost all sub-indexes saw prices surge, energy was up 3.0% m/m, industrial goods up 2.8% m/m and food up 1.0% m/m.
• This data provides strong evidence of accelerating broad-based price pressures, supporting a larger 75bp hike for the October meeting (prior to this data markets were pricing 69bp). Despite downside surprises in French and Spanish CPI yesterday, this failed to outweigh the hot German beat.
• Eurozone August unemployment data was also released, confirming the second consecutive month at a record low of 6.6%. The continued robustness of the labour market will provide confidence to the ECB as they continue to tighten.

Source: MNI / Bloomberg / EUROSTAT