Above target and not falling: three readings from Europe, the UK and Japan

Victoria Shinder03 October 2026, 13:072 min read

Three releases from the past few days look at inflation from different angles — an official price index, a survey of company finance chiefs, and the recorded views of a central bank board. Read together, they show the same pattern: inflation above target, little sign yet of it turning down, and policymakers focused on whether a supply shock is becoming something more persistent.

Euro area: the measured price level. Eurostat's flash estimate put annual inflation at 3.8% in September, up from 3.2% in August. Energy, at 18.8%, did most of the work, but services — the component most tied to wages and domestic demand — also rose, to 3.2% from 3.0%. Source: https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-02102026-ap

United Kingdom: what firms expect. In the Bank of England's Decision Maker Panel, companies expect their own prices to rise 3.7% over the next year, the same as they reported for the past year, and expect CPI inflation of 3.1% a year ahead and 2.8% three years ahead — all unchanged on the month. 57% still plan to raise prices because of energy costs, though that share is slowly falling. Source: https://www.bankofengland.co.uk/decision-maker-panel/2026/september-2026

Japan: what the board says it is now doing. The Bank of Japan's Summary of Opinions from its September meeting, at which it raised its policy rate to around 1.25% by a 7–2 vote, shows members describing a change in the purpose of policy: from pushing underlying inflation up toward 2% to keeping it from overshooting. One member said hikes should speed up if prices deviate upward; two argued against the move. Source: https://www.boj.or.jp/en/mopo/mpmsche_minu/opinion_2026/opi260918.pdf

What connects them. In each case, the headline number matters less than the part that reveals persistence. In the euro area it is services inflation edging up while energy jumps. In the UK it is expectations that sit above target and do not move, even as firms' own price plans soften at the margin. In Japan it is a board that, after years of trying to create inflation, now frames its task around containing it.

None of these settles anything on its own. The euro figure is a flash estimate, with country detail still to come on 16 October; the DMP measures intentions, not outcomes; the BoJ summary records views, not decisions. But they point the same way, and they explain why central banks that have already started raising rates are reluctant to say they are done. The indicators to watch next are the full euro area release, October's DMP on 30 October, and whether services inflation in each economy keeps rising after energy prices stop.