The annual rate of inflation in the eurozone dropped to an almost two-year low in September, the EU's official statistics agency said Friday.

Consumer prices in the 20-nation single currency bloc rose by an annual rate of 4.3 percent, Eurostat data showed, the lowest since October 2021.

The figure beat a consensus forecast by analysts compiled by financial data firm FactSet which said inflation would slow to 4.5 percent in September.

Inflation has steadily fallen since it reached a peak of 10.6 percent in October 2022 following the devastating effects of Russia's war on Ukraine across Europe.

The figure, however, remains well above the European Central Bank's two-percent target.

The ECB has hiked rates repeatedly to tame red-hot inflation, but the pain is being felt across the eurozone economy.

Friday's data will raise hopes among investors that the ECB will pause its rate-hiking cycle, as the eurozone economy weakens and concerns mount about the burden on households and businesses as a result of higher borrowing costs.

Core inflation, which strips out volatile energy, food, alcohol and tobacco prices, also slowed to 4.5 percent in September from 5.3 percent in August.

Core inflation is the key signal for the ECB.

Energy prices dipped further, falling by 4.7 percent in September on the back of a drop of 3.3 percent the previous month.

The rise in food and drink prices also slowed down, reaching 8.8 percent in September compared with 9.7 percent in August, according to Eurostat.

The Netherlands was the only country where consumer prices fell by 0.3 percent, according to Eurostat figures.

Germany, Europe's biggest economy, performed better than previous months, with inflation slowing down to 4.3 percent in September from 6.4 percent in August, Eurostat data showed.