France's September inflation picks up sharply, putting fresh pressure on ECB rate path

• France's final September CPI rate was +3.1% year on year, above the preliminary reading of +3.0%.
• The previous reading was +2.4%.
• September's final HICP rose +3.4% year on year, in line with the preliminary figure.
• That followed +2.6% beforehand.
• Core CPI was +1.5% year on year in September.
• Previously, core prices had risen +1.1%.

September's finalized data have now been published, and they give the European Central Bank little to take comfort from. The year-on-year readings confirm another marked rise in price pressures, adding to the inflation worry that has been building across the euro area.

Energy remains the biggest driver, with prices in the category up 21.3% on the year in September from 16.7% in August. That again is largely a consequence of the continuing fallout from the Middle East conflict.

Even so, broader price pressures are beginning to emerge elsewhere. Core annual inflation accelerated to 1.5% from 1.1% previously, helped by a sharp uptick in services inflation, which climbed to 2.4% from 1.9%. Core prices are still sitting under the 2% threshold for now, but the trajectory is not what policymakers would have hoped for.

For the moment, the ECB can still afford to be patient after having raised interest rates twice this summer. The open question is whether the current burst of inflation justifies another move sooner rather than later. Either way, the central bank cannot afford to be complacent.

Should higher energy prices feed through more visibly into services and wages, the case for another rate hike in December will only grow stronger.