Eurozone Inflation Is 4.0 Percent in October, Energy Is Up 20.8 Percent and Markets Expect an ECB Rate Hike in December

Annual inflation in the eurozone in October is 4.0 percent, up from 3.8 percent in September, according to Eurostat’s flash estimate published on November 4. We also use data carried by international media, because we could not open Eurostat’s own page.

What drives it. Energy is the fastest-rising component: the increase is 20.8 percent year on year, up from 18.9 percent in September. Services rise 3.3 percent (from 3.2), food, alcohol and tobacco 1.6 percent (from 1.3), and non-energy industrial goods 1.2 percent (from 1.1). Core inflation, excluding food and energy, stayed unchanged at 2.5 percent.

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Why core inflation matters. It shows whether price rises are spreading beyond energy. That it is stable at 2.5 percent means that for now price growth comes mainly from energy. Economists warn that higher gas and electricity prices will soon spread to other prices, but that broader effects are limited for now.

What the ECB said. The European Central Bank on October 29 left its three key rates unchanged. It warned that higher energy prices create risks of higher inflation and weaker growth. According to it, underlying inflation is “broadly stable so far” and wages show no material response. But in an ECB survey four in ten leading companies expect employees to seek higher wages because of the rising cost of living, which is linked to the war with Iran.

Expectations for December. The data strengthened expectations that the ECB will raise rates in December. ING assessed that the figures point to a December hike. The ECB deposit rate, according to our earlier texts and the brief, is 2.5 percent. That is a market expectation, not a decision.

Other central banks. Sweden’s central bank (the Riksbank) raised its rate by 25 basis points to 2 percent and signalled that further hikes are possible. The Bank of England decides on November 5.

What it means for North Macedonia. On November 3 the National Bank kept its key rate at 4.25 percent and projects inflation of 3.6 percent. The denar is in practice pegged to the euro, so domestic interest rate policy largely follows what happens in the euro area. If the ECB raises rates, the gap between the two rates would narrow from the current 1.75 percentage points (our calculation), and the National Bank would have less room to cut. Imports from the euro area could become dearer if energy and prices rise, but how much we cannot calculate without further data.

What to follow. The next euro area inflation data, the ECB decision in December and the reaction of the National Bank. Macedonian inflation in September was 2.7 percent, and the October figure is key for comparison.

MKNews Hub · Macedonia · November 5, 2026