Eurozone inflation rises to 4.0% on 20.8% energy price jump

Eurozone consumer price inflation rose to 4.0% in October from 3.8% in September, Eurostat's flash estimate said on 4 November. Energy prices were up 20.8% year on year.

Energy is again the main driver of eurozone inflation. The cost lands on household bills and industrial output, and it feeds into expectations for the ECB's December meeting. Retail gas and power contracts lag wholesale prices, so most of the household hit arrives in 2027 even if prices stop rising now, Cyprus Shipping News reported. Two things remain unknown: how cold the winter gets and whether LNG cargoes keep arriving at current rates.

Highest since September 2023

October's reading is the highest in three years and one month, since 4.3% in September 2023. Month on month the index rose 0.4%.

The energy component rose 20.8% year on year, against 3.3% for services, 1.6% for food, alcohol and tobacco and 1.2% for non-energy industrial goods. The categories households can shop around in are rising slowly, and the one they cannot avoid is rising fastest. Market expectations are rising that the ECB could raise its policy rate in December, JKN reported.

Gas briefly touches €100

The Dutch front-month contract at the TTF hub briefly traded at €100 per MWh at around 1335 GMT, up around 4% from the previous session, ICE data showed. Cyprus Shipping News reported that prices are trading at around triple pre-Iran war levels. In October, the European TTF price index and the Asian JKM averaged about $28 per MMBtu, among their highest levels since the 2022 energy crisis, UA.News reported.

The record TTF peak was around €340 in August 2022, so €100 is not a rerun of that autumn. It is still high enough to reset contracts, hedges and bills that were priced off a calmer market.

EU gas storage is nearly 75% full and Germany's around 60%, both significantly below last year, Cyprus Shipping News reported. The IEA said in its Global Gas Security Review 2026, released on 3 November, that Europe is entering the heating season with the lowest storage fill in more than a decade.

Supply is thinner than storage alone suggests. Europe's LNG imports were 30% below last year in the week ending 9 October, said Mathieu Utting, gas and LNG analyst at Rystad Energy. Equinor's CEO said Europe could face another price spike if cold weather lifts demand later this winter.

Analysts and industry forecasters cited by Cyprus Shipping News expect at least another year of high gas prices even if the war is resolved and winter proves mild, because Europe must restock storage depleted to record lows.

Industry pays first, households later

Chemicals, fertilisers and steel buy gas as fuel or feedstock at or near wholesale prices, and some companies have cut output, Cyprus Shipping News reported. Power prices follow. The German front-year baseload contract rose 1.7% to €159.30/MWh, the highest since June 2023, and the French equivalent hit a near two-year high of €122.50/MWh.

Governments are already paying part of the bill. EU governments have spent €17.9 billion this year cushioning households and firms from higher oil and gas costs, the European Commission said. German gas tariffs for new customers are up 55% this year, and British bills are set to rise again in January.

US LNG is a cushion, not a cure

US LNG shipments to Europe rose from 5.91 million tonnes in September to 6.89 million tonnes in October, about 16.6% more, according to LSEG data reported by Reuters. October was the second-highest month for US LNG exports on record overall, and Europe was the main destination.

Asia lost share in the same shift. Shipments there fell from 2.84 million to 2.73 million tonnes, and about 590,000 tonnes left US terminals without a final destination, available to whichever market pays more.

That redirect is a cushion, not a cure. Hostilities and shipping disruption in the Strait of Hormuz have limited gas exports from the Persian Gulf, primarily from Qatar.

Eurostat publishes final October inflation data on 1 December.