Euro area GDP grows 0.4% in Q3 while Italy's economy stalls and inflation hits 5.4%

Euro area growth eases

Eurostat's flash estimate puts gross domestic product in the euro area 0.4% higher in the third quarter of 2026 than in the previous quarter, down from 0.6% in the second quarter. Across the European Union as a whole, output rose 0.5% after 0.7%. Compared with the third quarter of 2025, euro area GDP grew 1.3% and EU output 1.5%, both slightly stronger than the 1.2% and 1.4% recorded in the prior quarter. The release is a preliminary flash estimate, and the country breakdown below shows where the slowdown is concentrated.

Euro area0.4%

EU0.5%

Spain0.6%

Germany0.2%

Italy0%

France-0.1%

Lithuania-1%

Euro area

0.4 %

EU

0.5 %

Spain

0.6 %

Germany

0.2 %

Italy

0 %

France

-0.1 %

Lithuania

-1 %

Data from the article text

Italy's economy stalls

Istat's preliminary estimate shows Italian GDP unchanged from the second quarter once calendar effects and seasonality are removed. Services and agriculture added to output, while industry shrank. On the demand side, domestic spending excluding inventories made a positive contribution, while net foreign demand subtracted from growth. Year on year, GDP rose 0.8%, a slowdown from 1.0% in the previous quarter. A carry-over figure shows the growth that would result if the economy stayed flat for the rest of the year, and Istat put the 2026 figure in these terms:

“The quarter-on-quarter stagnation observed in the third quarter leaves the carry-over growth for 2026 unchanged at 0.8%.”

Other large economies

Germany's economy grew 0.2% in the quarter according to Destatis, slowing from 0.3% in the second quarter but still ahead of market forecasts of 0.1%. Spain posted 0.6%. France shrank 0.1% according to Insee, a result worse than expectations, which had pointed to a small gain. Insee said output fell 0.1% between July and September, household consumption accelerated 0.4%, and investment declined 0.6%. Foreign trade also subtracted 0.6 points from French GDP. Among 15 countries with available data, only France and Lithuania, which fell 1%, performed worse than Italy.

Inflation climbs to 5.4%

Istat's preliminary estimate puts Italian consumer prices 5.4% above a year earlier in October 2026, up from 4.2% in September and the highest reading since August 2023. Month on month, the consumer price index rose 0.9%. Energy drove the acceleration: energy prices rose 31.4% year on year after 22.6% in September. Regulated energy climbed 59.5%, up from 25.8%, while non-regulated energy rose 29.4%, up from 22.5%. Unprocessed food rose 7.5% and transport services 3.1%, while the decline in processed food narrowed to 0.2%.

2026-094.2%

2026-105.4%

2026-09

4.2 %

2026-10

5.4 %

Data from the article text

Core inflation and what drives it

Core inflation, which excludes energy and fresh food, accelerated to 2.0% from 1.6%, while the measure excluding only energy rose to 2.5% from 2.0%. Goods prices accelerated to 7.5% from 5.4%, far faster than services at 2.9%, up from 2.6%. The gap between services and goods widened from minus 2.8 to minus 4.6 percentage points. The harmonised index, HICP, reached 5.6% on an annual basis. Istat said energy prices remain influenced by the international geopolitical situation. Carry-over inflation for 2026 stands at 3.4% for the general index and 1.9% for the core component.