The annual inflation rate rose for the second month to 4.5% in September 2026 from 4.4% in August, but below the expected 4.7%. Still, the headline inflation remained above the SARB’s 3% target and the upper bound of its 2%–4% tolerance band. The acceleration was largely driven by rising transport prices, which climbed further by 10.8%, compared to 8.8% in August, largely reflecting a sharper increase in fuel prices (27.9% vs 20%). Diesel prices jumped 46.0%, while petrol prices rose 25.0%, following domestic price hikes. Food inflation also rose slightly faster to 1.2% from 1.1% in August. The core inflation, which excludes prices of food, non-alcoholic beverages, fuel and energy, edged down to 4.0% in September from 4.1% in August. On a monthly basis, the CPI went up by 0.4%, after being flat in the previous month.

European stocks edged higher on Wednesday, with the STOXX 50 gaining 0.2% and the STOXX 600 rising 0.1%, recovering modestly after two consecutive sessions of losses. Markets drew support from corporate earnings reports in the US, including those from SpaceX and 3M, while investors also focused on quarterly results from European companies. EssilorLuxottica surged more than 11% after reporting stronger-than-expected third-quarter revenue, while ASML Holding advanced 2%, ABB added 1%, BP gained 1.7% and Infineon rose 1.4%. In contrast, Carrefour shares plunged more than 10% after the retailer lowered its profit forecasts and cut capital expenditure plans, citing ongoing domestic unrest and an energy price shock weighing on consumer sentiment. Unilever (-1.1%) and Prosus NV (-2.7%) also traded in the red.

Turkey’s manufacturing confidence index fell further to 99.8 in October 2026 from 102 in the previous month, falling below the 100-point threshold for the first time since December 2024. Confidence in current orders declined to 85.3 from 87.8 in September, while production expectations for the next three months dropped to 107 from 115.6. Export order expectations for the next three months fell to 109.7 from 111.9, while total orders over the past three months decreased to 100.7 from 104.2. Moreover, the general business situation deteriorated further, falling to 83.9 from 90.4. Meanwhile, current finished goods stocks rose to 100.4 from 96.9, while fixed investment expenditure expectations improved to 107.2 from 104.9. Expectations for total employment over the next three months edged up to 104.5 from 104.4.

Sterling held above $1.335, its highest level in a month, as stronger-than-expected UK inflation data reinforced expectations of a Bank of England rate hike next month. UK inflation climbed to 3.5% in September, its highest level since October 2025, exceeding forecasts of 3.4%, driven by motor fuels. Core and services inflation also came in above expectations. Public sector net borrowing reached £24.5 billion, higher than forecast, ahead of next week’s budget. The data follow signs of a resilient economy, including an unexpected fall in unemployment, 0.1% GDP growth in August and a narrower trade deficit. Markets are now fully pricing in a 25-basis-point increase in Bank Rate in November. The central bank has so far been the only major central bank yet to begin a policy-tightening cycle. However, Governor Andrew Bailey’s recent remarks suggesting that a prolonged war could increase pressure on policymakers to act suggest that a rate hike may be approaching.

Bank Indonesia (BI) unexpectedly maintained its key interest rate at 5.75% for the fourth straight meeting on October 21, despite renewed pressure on the currency recently, defying expectations of a 25 bps hike. BI also kept the rate on its lending facility at 6.5% but raised the overnight deposit facility rate (DFR) by 25 bps to 5%. BI lowered banks’ reserve requirement ratio (RRR) to 7% from 9% for conventional banks and to 5.5% from 7.5% for Islamic banks. However, BI remained focused on keeping inflation within its target range while supporting GDP growth. BI raised rates by a total of 100 bps in May and June combined, bringing the policy rate to its highest level since April 2025 to attract foreign inflows and shore up the rupiah. The annual inflation rate accelerated to a three-month high of 3.28% in September, while core inflation eased to 2.84%. BI expects inflation to remain within its 2.5% ± 1% target range and has maintained its GDP growth forecast of 4.9%–5.7% for 2026.

Brent crude rose toward $110 per barrel on Wednesday, resuming its advance toward five-month highs as investors assessed mixed reports on diplomatic progress between the US and Iran. Prices fell sharply on Tuesday after Pakistan’s army chief, Field Marshal Asim Munir, met with senior Iranian diplomatic and military officials in Tehran to discuss bilateral ties and the status of negotiations with Washington. However, a diplomat involved in the discussions dismissed reports that a deal was imminent, while confirming that efforts to end the conflict remain underway. Oil prices have gained more than 10% this month as intensifying hostilities involving Saudi Arabia and Iran-backed Houthi forces, as well as Russia and Ukraine raised supply risks further. At least 18 vessels have also come under attack in the Strait of Hormuz over the past two weeks. Despite these risks, oil flows from the Middle East have largely recovered to around 80% of prewar levels.