Annual inflation in the eurozone fell to 4.3% in September, the lowest level since October 2021, showed alarming figures released on Friday by the European Statistics Office, Eurostat, CNBC and a news.ro report.

The rate of inflation decreased from the level of 5.2% reached in August, and on a monthly basis inflation slowed from 0.5% to 0.3%.

Core inflation, which excludes energy, food, alcohol and tobacco and is closely watched by monetary policymakers, slowed to 4.5% year-on-year in September from 5.3% in August.

The new inflation data came after the European Central Bank (ECB) decided to raise interest rates to a record high in September, setting the key interest rate at 4%.

The move was described as a “conciliatory hike” after the ECB also gave its strongest hint yet that governing council members believe interest rates may be at a high enough level to bring inflation to the ECB’s medium-term target.

The bank’s latest macroeconomic forecasts for the eurozone see inflation averaging 5.6% this year, slowing to 3.2% in 2024 and 2.1% in 2025.

Officials have tried to temper expectations of a key rate cut, with French central bank chief Francois Villeroy de Gaulle telling CNBC this week that it would be “premature” to bet on when the first cut will happen.

The picture remains complex, with the ECB forecasting slow economic growth of 0.7% for the bloc this year, followed by 1% and 1.5% in the next two years.

The recent rise in oil prices may also pose a risk to the bank’s inflation forecasts.

The picture of inflation in European countries remains very different. Annual price growth in Germany, the eurozone’s biggest economy, remains well above the 4.3% target as it also battles an economic downturn.

According to Eurostat, the EU’s statistics agency, headline inflation in the eurozone was 5.6% in France and 3.2% in Spain in September, while Slovakia and Slovenia are struggling with inflation of 8.9% and 7.1%.