Eurozone Inflation Climbs Back to Target as ECB Primes New Rate Cut — 2nd Update

By Joshua Kirby

The eurozone's annual rate of inflation was in line with the European Central Bank's target in October, increasing the likelihood that policymakers will lower borrowing costs for a third straight meeting.

Consumer prices were 2.0% higher than a year earlier across the 20-member currency area, a pickup from the 1.7% rate of inflation recorded in September, according to EU statistics agency Eurostat. Economists surveyed by The Wall Street Journal last week had expected to book a smaller rise to 1.9%.

Services inflation, which earlier in the year had kept price rises stubbornly above target, was unchanged at 3.9%, as was the core rate of inflation at 2.7%.

With prices rising broadly in line with their expectations, ECB policymakers are becoming more confident that they are on course to tame the surge in inflation that followed Russia's full-scale invasion of Ukraine early in 2022. The resultant energy shock drove consumer prices rapidly higher across the continent and around the world.

There are also signs they are on course to achieve a soft landing, by bringing inflation down to their target without pushing the economy into a recession or wiping out a large number of jobs. Following figures released Wednesday that showed the eurozone economy accelerated in the three months through September, Eurostat on Thursday said the unemployment rate remained at 6.3% in September, a record low.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby