Inflation in the euro zone fell to its lowest level in two years in September, suggesting the European Central Bank’s steady diet of interest rate hikes was succeeding in curbing runaway prices albeit at a growing cost for economic growth.

Consumer prices in the 20 countries that share the euro rose by 4.3% in September, the slowest pace since October 2021, from 5.2% one month earlier, according to Eurostat’s flash reading published on Friday.

Inflation excluding food, energy, alcohol and tobacco — which is closely watched by the ECB as a better gauge of the underlying trend — fell to 4.5% from 5.3%, the biggest drop since August 2020.

These readings were likely to strengthen the ECB’s conviction that it had raised interest rates far enough to bring down inflation to its 2% target by 2025, after being wrong-footed by a surge that started in 2021.

“Base effects played a key role in explaining the sharp fall in inflation, but the figures also suggest that underlying inflationary pressures are becoming less intense,” Diego Iscaro, head of European economics at S&P Global Market Intelligence, said.

“The figures reinforce the view that interest rates have likely reached their peak in the current tightening cycle.”

The inflation drop was broad-based, with all price categories growing at a slower pace and energy prices falling outright for a fifth consecutive month.