According to the first estimate, euro zone CPI inflation for September jumped from 2.5% Y/Y to 3.0% Y/Y and this outcome was confirmed by the final figure. On a monthly basis, CPI rose by 0.8% M/M led by higher prices for clothing (14.1% M/M), education (1.0% M/M) and energy (0.9% M/M). Prices for recreation & culture (-1.1% M/M), hotels & restaurants (-0.8% M/M), communication (-0.3% M/M) and transport (-0.1% M/M) dropped in September. Core CPI, which excludes the volatile energy and food prices, rose sharply too, from 1.2% Y/Y to 1.6% Y/Y, while the consensus was looking for an increase to 1.5% Y/Y. Inflation reached a new cyclical high in September and the highest level since October 2008 partly due to the new method of measuring seasonal goods, which added a lot of volatility. We believe however that inflation should fall significantly at the end of the year and early next, giving the ECB some room to cut rates.