France’s inflation rose to 3.4% in September, the fastest pace in more than two years, increasing pressure on the ECB to raise interest rates.

(1) French inflation accelerated to its fastest level in more than two years, putting greater pressure on the European Central Bank to continue raising interest rates. (2) Data released on Wednesday by the French National Institute of Statistics and Economic Studies showed that France's inflation rate rose to 3.4% in September, up from 2.6% in August and exceeding economists' expectations of 3.2%. France is the second-largest economy in the Eurozone. (3) French data indicate that current inflationary pressure still mainly comes from energy costs. In September, energy prices rose by 21.2% year-on-year. (4) This is consistent with statements from European Central Bank officials, who have said that the impact of the Middle East conflict has not yet triggered a significant second-round inflation effect. (5) However, inflation in France's services sector accelerated, rising to 2.2% in September from the previous 1.9%; food inflation also rose from 1.1% to 1.5%, mainly driven by higher prices of fresh agricultural products.