Euro zone inflation hit its highest level in 13 years in September, as bloc battles surging energy costs, according to the European Union statistics agency 

According to preliminary estimates from Europe’s statistics agency Eurostat, headline inflation was 3.4 percent last month. This was the highest level of inflation since September 2008, when it was 3.6 percent. It follows a 4.1 percent increase in German consumer prices in September, the largest level in over 30 years. 

The increase was driven by rising energy prices, which has increased officials’ concerns. Since the beginning of the year, the front-month gas price at the Dutch TTF hub, a European benchmark, has climbed about 400 percent. 

Furthermore, this record surge in energy prices isn’t expected to end very soon, with energy analysts predicting that it will last into winter. France has become the latest country to increase consumer cost-cutting initiatives. Prime Minister Jean Castex announced on Thursday that the government would oppose any future hikes in natural gas prices as well as increases in electricity rates. 

Is it temporary? 

Recent surges in inflation, central bankers believe, are “transitory” and that pricing pressures will ease in 2022. A jolting 17.4 percent spike in energy prices pushed overall inflation higher. 

European Central Bank President Christine Lagarde said, “Energy is going to be a matter that will probably stay with us longer. Because we are transitioning, as well, from fossil industry-driven sources of energy.” 

However, other economists wonder if all of the pricing pressures are temporary and if the central bank should adjust monetary policy more swiftly. 

“Even if inflation stays higher for longer, we still think the European Central Bank will stick to its dovish approach,” said Andrew Kenningham, chief Europe economist at Capital Economics.