Euro area inflation rises to 3.8%: energy up 18.8%, protests across Europe

In brief

• Annual euro area inflation in September 2026 was 3.8%, up from 3.2% in August and 2.2% a year earlier.
• Energy prices rose 18.8% over the year. Energy contributed 1.71 of the 3.8 percentage points.
• Excluding energy, inflation is 2.3%; excluding energy, food, alcohol and tobacco, 2.5%.
• The highest rates in the EU are in Romania (6.5%), Lithuania (6.1%) and Bulgaria (5.6%); Greece is at 5.1%.
• The rise in energy prices is linked to the conflict in the Middle East. EU governments have spent EUR 17.9 billion since the start of the year cushioning energy bills.

3.8% in September: what Eurostat showed

Eurostat published its flash estimate in early October and confirmed it with final data on 16 October. Euro area inflation rose from 3.2% in August to 3.8% in September. For comparison, in September 2025 it was 2.2%. Over a year, price growth almost doubled. Across the whole European Union, including countries outside the euro area, the rate also rose, with the highest values in Eastern European countries.

The main driver is energy: its prices rose 18.8% over the year, against 14.3% in August. Services rose 3.2%, food, alcohol and tobacco 1.4%, and non-energy industrial goods 1.1%. Excluding energy, inflation is 2.3%, and excluding food, alcohol and tobacco as well, 2.5%.

It also matters that services are getting more expensive faster than goods. The 3.2% rise in service prices is driven mainly by wages and rents, and it will not disappear even if energy gets cheaper. That is why core inflation of 2.5% stays above the central bank's target.

What this means for you. European inflation is now above all energy inflation. That means heating, electricity and transport bills are rising fastest, while prices of most other goods are rising moderately.

Energy: who is hit hardest by rising prices

An 18.8% annual rise in energy prices is felt unevenly. It hits hardest households that spend a large share of income on heating, electricity and fuel: residents of countries with cold winters, owners of large gas-heated homes and people who drive a lot. It hits least those living in small flats in a warm climate who use public transport.

Much also depends on how tariffs are set in each country. In some countries household prices are regulated or capped, and wholesale price rises reach people with a delay. In others tariffs are market-based, and bills change almost at once. So the same rise in oil and gas prices affects residents' budgets differently in different countries.

For a foreigner renting a home, it matters who pays for utilities: whether they are included in the rent or paid separately. When energy prices rise, a contract with fixed utility charges may turn out cheaper, but landlords build this risk into the rent.

What this means for you. If you are choosing a home in Europe for winter 2026-2027, check how utility charges are calculated and build rising energy bills into your budget.

Where are prices rising fastest?

The average hides large differences between countries. Among EU countries, the highest inflation in September was in Romania at 6.5%, Lithuania at 6.1% and Bulgaria at 5.6%. In Greece, according to national data, inflation rose to 5.1%. Romania is not in the euro area, but its rate is included in overall EU statistics.

For those choosing a country to live in, this is an important correction to familiar comparisons. A country with low prices may turn out to be a country with fast-rising prices, and a budget based on last year's prices will stop adding up. This especially affects those living on a fixed income: a pension, an annuity, investment income.

Housing is a separate topic. Rent is not part of energy, but it has become the trigger for protests in Portugal and Spain. We wrote about how rent regulation is changing in the article on rents in Europe in autumn 2026.

What this means for you. When comparing countries for a move, look not only at the price level but at how fast prices are rising. High inflation in the chosen country eats into fixed income faster.

How inflation is measured and why figures differ

Eurostat publishes the Harmonised Index of Consumer Prices. It is calculated using a single method in all EU countries so that the figures can be compared. National statistical offices calculate their own indices in parallel, and their results can differ from Eurostat's by a few tenths of a percentage point.

Differences between countries reflect not only how fast prices rise but also the structure of spending. In countries where households spend a larger share of their budget on energy and food, rising energy prices weigh more on the overall figure. Where more is spent on services, wages and rents matter more. That is why the same rise in oil prices produces different inflation in Lithuania and the Netherlands.

If you are comparing countries to live in, it helps to look at two figures: headline inflation and core inflation, excluding energy and food. The first shows how everyday costs are rising right now. The second shows how persistent the price rise is and whether it will last once energy becomes cheaper.

What this means for you. If the chosen country has both high headline and high core inflation, the price rise is likely to last. If only headline inflation is high, much depends on energy prices.

What does inflation mean for rates and mortgages?

The European Central Bank aims for inflation of around 2% over the medium term. September's 3.8% is almost double that target. When inflation is well above target, a central bank has less reason to cut rates. This is our assessment of the general logic, not a forecast of a specific decision: the ECB also looks at core inflation, which is now closer to target.

This matters for those buying a home in Europe with a mortgage. In Spain and Portugal many loans carry a variable rate linked to the Euribor interbank index. If rates stay high for longer, payments on such loans do not fall. Banks already lend to buyers from abroad on stricter terms, and high rates make mortgages even more expensive.

For savings the picture is the reverse: high rates help deposits and bonds at least partly keep up with inflation. But real returns remain under pressure while inflation is above rates.

What this means for you. If you plan to buy a home in Europe on credit, calculate payments at current rates, not in the hope that they will fall. With a variable rate, allow a margin.

Protests in 4 countries: what people are demanding

Rising prices have brought people onto the streets. According to press reports, unions marched in Brussels and Paris. In Greece students camped outside the parliament building in Athens. In Portugal thousands rallied in Lisbon and Porto over the cost of rent.

In Spain, discontent over housing costs has had political consequences. According to the press, after parliament rejected two government housing decrees, Prime Minister Pedro Sánchez called a snap election for 29 November.

Brussels is responding cautiously. The EU is coordinating releases of oil from strategic stocks and urging governments to use targeted aid rather than general subsidies. The EU does not regulate prices, rents or tuition fees: national governments decide these. Since the start of the year EU countries have spent EUR 17.9 billion cushioning energy bills for people.

What this means for you. Government responses will differ: some will freeze rents, some will raise taxes on home purchases by foreigners, some will introduce targeted aid. For a foreign buyer or tenant this means more rules that change quickly.

Checking a move budget against rising prices

Many residence programmes for financially independent people require proof of passive income above a certain amount. These amounts are usually linked to the minimum wage or other national indicators and are revised. When prices rise quickly, both thresholds and real costs rise. Income that was enough to apply a year ago may now be cutting it fine.

For example, in Portugal the D7 visa threshold is linked to the minimum wage; more on the page on the D7 visa. If you plan to move in 2027, budget with a margin: not by the programme threshold but by your family's real costs, including rent and energy.

What this means for you. A move budget based on last year's prices is already inaccurate. Recalculate it before filing documents.

What inflation means for investments and property

For euro savings, inflation of 3.8% means money in a low-rate account loses purchasing power. If the deposit rate is below inflation, the real return is negative. This is an argument for investments that at least partly protect against rising prices, but the specific choice depends on your horizon and attitude to risk.

Property is traditionally seen as an inflation hedge, but the picture is mixed. Higher energy prices increase running costs, and political reactions to expensive rents may limit landlords' income. In addition, some countries are introducing new taxes for foreign buyers, such as Greece, which is discussing a 15% purchase tax for non-EU buyers; see the news on the 15% tax in Greece.

Buyers for whom a home is a way to obtain residence depend less on rental yield, and market data show their share is growing. More in the news on property purchases for residence. Property selections in different countries are in the real estate section.

What this means for you. Inflation in Europe is no reason to abandon plans, but it is a reason to recalculate returns and costs. Especially if you were counting on living off rental income.

What comes next: 3 factors

1. Energy. If oil and gas prices stabilise, inflation may slow as quickly as it rose: energy accounts for almost half of the increase.
2. Government measures. Targeted aid and measures against rising rents will differ by country and may change conditions for foreign residents and buyers.
3. Core inflation. Excluding energy and food, price growth is 2.5%. If this measure starts rising, the price increase has spread to services and wages, and high prices will linger.

We will follow new Eurostat data and decisions by the governments of the countries our clients move to. On how conditions are changing for wealthy families in neighbouring Britain, see the news on dropping the investor visa. Residence programmes are in the catalogue.

How this article was prepared

Data on euro area inflation and its components follow Eurostat's September 2026 estimate, confirmed on 16 October 2026. Data for Greece follow national statistics as reported by the press. Information on protests, the snap election in Spain and EU measures, including EUR 17.9 billion of government spending to cushion energy bills, is given as reported by the press. The link between rising energy prices and the conflict in the Middle East follows assessments cited by the press. This article is not investment advice and does not replace advice on your own situation.