French, Spanish Sept inflation falls faster than expected
German labour market continues to cool
Investors now see 75 chance of October rate cut

FRANKFURT, Sept 27 Reuters Inflation has eased more than expected in two of the euro zone39;s biggest economies and the German jobs market has continued to cool this month, adding to an already substantial case for the European Central Bank to cut borrowing costs further next month.

The euro zone economy has been skirting recession for most of the year and price pressures have eased more than expected in recent months, fuelling arguments that the ECB has fallen behind the curve in supporting an ailing economy.

The ECB has pushed back on calls for faster policy easing on the premise that wage growth and services inflation remain uncomfortably high. But lower than predicted inflation readings out of France and Spain on Friday challenged this narrative.

French inflation has slowed to 1.5 in September from 2.2, below expectations for 2.0, while Spanish inflation eased to 1.7 from 2.4, undershooting expectations for 1.9, as services price growth eased and energy prices fell.

Separate data on price expectations also challenged the ECB39;s hesitancy as they showed consumers cutting their price growth expectations for the next 12 months to their lowest level since September 2021.

Adding to recent data that paint a gloomy picture on growth, a key euro zone sentiment indicator dropped more than expected on Friday while also…