Inflation in the eurozone eased once again in October to reach its lowest level in more than two years. According to a second estimate released by Eurostat in Luxembourg on Friday, the annual inflation rate fell to 2.9% from 4.3% in September.

Inflation at lowest level since 2021

Consumer prices rose by 0.1% in October compared to the previous month. With October's decline, the inflation rate in the single currency area is back below three percent for the first time since the summer 2021.

Core inflation, which excludes volatile energy and food prices, also fell. The annual rate fell to 4.2% from 4.5% in the previous month.

Many economists believe that core inflation reflects underlying inflation and is therefore a slightly better measure of inflation trends than the overall rate.

Falling energy prices, a contributing factor

The decline in inflation was helped by falling energy prices. Energy prices fell by 11.2% in October compared with the same month last year. Although food prices were still significantly higher than a year earlier, the rate of food inflation slowed from 8.8% to 7.4%.

Prices for services rose only slightly less than in the previous month.

Inflation trends continued to vary widely among eurozone countries. Slovakia recorded the highest annual rate at 7.8%, while prices fell in Belgium (-1.7%) and the Netherlands (-1.0%). In Germany, inflation was 3.0%.

Despite the significantly weaker inflation, the European Central Bank's (ECB) medium-term inflation target of 2% is still being exceeded. The ECB had raised its key interest rates significantly over the course of the year to combat high inflation, but recently left them unchanged.

Eurozone inflation reached its peak of 10.6% in October last year following Russia's invasion of Ukraine, which sent energy prices spiraling.

This report was written in part with material from news agency DPA.

Edited by: Kieran Burke