Euro Zone Inflation Hits 4%, Highest Since 2023, as Energy Jumps

Prices in the euro zone rose 4.0% in the year to October, Eurostat's flash estimate showed Wednesday, up from 3.8% in September. It's the first reading at 4% or higher since September 2023, when inflation hit 4.3%, CNBC reported.

Energy did most of the work.

Energy prices were 20.8% higher than a year earlier, up from 18.9% in September, while inflation excluding energy held at 2.3%. Services rose 3.3%.

Core inflation didn't budge

Core inflation, which strips out energy, food, alcohol and tobacco, stayed at 2.5%, Eurostat's table shows. The European Central Bank aims for 2%. All 21 euro countries are above that, from 2.3% in Malta to 6.1% in Lithuania, CNBC reported.

How the number gets made: a flash estimate is Eurostat's first quick read, published at the end of the month before every price is in. The full October figures, which can revise it, are due Nov. 18.

December hike odds near 72%

The ECB held its key rate at 2.5% in October after a 0.25-percentage-point hike in September. After Wednesday's release, markets priced more than a 72% chance of another hike at the bank's December meeting, CNBC reported. The 4.0% matched the forecast of economists polled by Reuters.

Why crypto readers care: higher rates raise what savers earn on cash and bonds. That lifts the bar for assets that pay no interest, like bitcoin. The euro rose 0.6% against the dollar Wednesday morning, per CNBC, and bitcoin was near $78,490 at 5:55 a.m. ET, up 2.0% in 24 hours, per CoinGecko.

In our opinion: watch core at 2.5% before the 4% headline. With energy doing nearly all the lifting, the ECB has to decide whether to raise rates against a price shock that its rate tools don't produce. Nov. 18 brings the full data, and the December meeting brings the answer.