BRUSSELS — Eurozone inflation climbed to a three-year high of 4.0 per cent in October as the Middle East war fuelled a surge in energy costs, official data showed Wednesday.

 

The figure for the 21-country euro area was up from 3.8 per cent in September and remains well above the European Central Bank's two-per cent target.

 

The October reading was in line with the forecast by economists for Bloomberg.

 

Analysts said they expected another interest rate increase by the ECB this year following the data's release.

 

"Concerns about the high level of inflation look set to prompt the ECB to raise interest rates again in December, but we suspect that will be the end of the tightening cycle," Jack Allen-Reynolds of Capital Economics said.

 

The ECB last week kept its benchmark interest rate on hold but opened the door to another hike in December.

 

Inflation in the single currency area was last above 4.0 per cent in September 2023, when it stood at 4.3 per cent.

 

Energy price increases surged to 20.8 per cent in October, up from 18.9 per cent a month earlier, Eurostat said.

 

Core inflation, which strips out volatile energy and food prices, remained stable at 2.5 per cent last month.

 

Meanwhile, food and drinks inflation increased to 1.6 per cent in October from 1.3 per cent in September.

 

Allen-Reynolds said the indirect effects of higher energy costs on food and core inflation remained "very small".

 

But he said "we suspect that the impact of higher energy costs will feed through to food and core inflation more noticeably in the coming months".