The food, alcohol and tobacco prices were the main drivers of the annual inflation rate in the 20-member eurozone.

The inflation rate here was 8.8 percent in September, compared with 9.7 percent in August.

The annual services price inflation rate dropped from 5.5 percent in August to 4.7 percent in September.

The prices of non-industrial goods saw the annual inflation drop from 4.7 percent in August to 4.2 percent in September.

The contribution of energy prices to the annual inflation was negative. The rate was -4.7 percent in September, even less than -3.3 percent in August.

Country by country, the highest year-on-year inflation rates were recorded in Slovakia (8.9 percent), Croatia (7.3 percent) and Slovenia (7.1 percent).

“Inflation fell more than expected from 5.2 percent to 4.3 percent in September, an encouraging sign,” Bert Colijn, senior economist at ING for the Eurozone, commented.

This drop in the annual inflation rate can be explained by base effects from last year’s government support schemes, Colijn said.

The difference between the eurozone members’ inflation rates is due to “how energy translates to consumer prices, but also by differences in wage growth and economic performance,” he said.

Year-on-year inflation in Spain increased in September from a low base, from 2.4 percent in August to 3.2 percent this month, on the back of increasing energy prices.

Germany, the Netherlands and Belgium recorded sharp drops in their yearly inflation rates. The rate in Germany went down from 6.4 percent in August to 4.3 percent in September.

However, “higher oil prices are a concern for the inflation outlook,” Colijn said. The price of oil had not decreased as much as expected in recent months and is rising again. A barrel of Brent oil now costs slightly over 90 U.S. dollars.

Since July 2022, the ECB has lifted interest rates ten times, pushing rates up by a total of 450 basis points.

This rate hiking cycle has been the most aggressive one in the history of the ECB both in terms both duration and aggregated magnitude.

Some analysts said today’s lower-than-expected inflation rate paves the way for the ECB to pause further interest rate rises.