Yearly inflation in the Eurozone should fall to 2.9 percent in October, compared to 4.3 percent in September, the lowest levels in more than two years. Meanwhile, the Eurozone's gross domestic product (GDP) went down by 0.1 percent during the third quarter of 2023 compared to the previous quarter, according to a flash estimate published on Tuesday by Eurostat.
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Inflation in the Eurozone is still being driven by food, alcohol and tobacco, with year-on-year inflation of 7.5 percent. The price of services recorded 4.6 percent inflation year-on-year in October, while non-energy industrial goods saw their yearly inflation rate go down to 3.5 percent, and yearly inflation for the price of energy went down to -11.1 percent this month.
Countries with the lowest yearly inflation rates include Belgium with -1.7 percent, the Netherlands with -1 percent, and Italy with 1.9 percent.
The highest year-on-year inflation rates were recorded in Slovakia with 7.8 percent, in Croatia with 6.7 percent, and in Slovenia with 6.6 percent.
In the third quarter of 2023, seasonally adjusted GDP increased by 0.1 percent in the European Union (EU), compared with the previous quarter. In the second quarter of 2023, GDP grew by 0.2 percent in the euro area, and remained stable in the EU.
Among the member states for which data is available, the countries that recorded the highest quarter-to-quarter GDP growth include Latvia with 0.6 percent, Belgium with 0.5 percent, and Spain with 0.3 percent. The lowest GDP growth was recorded in Ireland with -1.8 percent, and Austria with -0.6 percent.
"It does look like the economic environment is weakening at the moment, but no sharp recession is in sight," ING economist Bert Colijn said, adding that economic and geopolitical uncertainties could influence the coming quarters' economic performance.
September and October were a positive surprise, despite high oil prices and still stubborn wage growth, boosting confidence that inflation is slowing down.
"The numbers start to point to a much better inflation environment, especially now that the economy is clearly performing much weaker than last year and most of the impact of recent hikes is still in the pipeline," said Colijn.
The European Central Bank (ECB) has kept its three key rates unchanged amid fears that the 20-nation eurozone could be headed for recession.
ECB President Christine Lagarde said earlier that "upside risks to inflation could come from higher energy and food costs. The heightened geopolitical tensions could drive up energy prices in the near term, while making the medium-term outlook more uncertain."
In the past 15 months, the ECB has raised its baseline interest rate ten times, in a bid to curb the impacts of record-setting inflation.