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Inflation in the euro zone hit a two-year low a month after its economy began contracting, data showed on Tuesday, illustrating the dual impact of a steady diet of European Central Bank’s interest rate hikes.

Prices rose by just 2.9% in October, their slowest pace since July 2021, a Eurostat flash reading showed, a time when the ECB was still worried about inflation getting stuck below its 2% target.

But the brisk decline from the double-digit figures of just a year ago is coming at a cost: the euro zone economy dipped by 0.1% in the three months to September, according to a separate Eurostat release, and is flirting with a recession.

The two sets of data mean the ECB is almost certainly done with raising interest rates, which are at record highs, and will now watch the effect of its an unprecedented streak of 10 straight hikes play out before making further moves.

“The data leaves the ECB firmly on hold,” Dirk Schumacher, an economist at Natixis, said.

Headline inflation started falling sharply last month as the massive increase in energy prices recorded a year earlier set a higher base for the annual comparison – an effect set to fade or even reverse in upcoming readings.

But a measure of inflation that excludes energy, food, alcohol and tobacco also declined – to 4.2%, the lowest level since July 2022, from 4.5%.

That measure is viewed by the ECB as a more accurate reflection of the underlying trend and is likely to cement its expectation that inflation will slowly head towards its 2% target by 2025.

The last mile may well prove the hardest, however.

“It’s now down to weaker demand grinding down inflation and that’s a slow process,” Natixis’ Schumacher said.

It is a painful one too, with gross domestic product in the 20 countries that share the euro expected to continue contracting in the final quarter.

“It does look like the economic environment is weakening at the moment, but no sharp recession is in sight either,” ING economist Bert Colijn said.

“Still, continued economic and geopolitical uncertainty alongside the impact of higher rates on the economy will weigh on economic activity in the coming quarters.”

Israel said its forces attacked Hamas gunmen inside the militants’ vast tunnel network beneath the Palestinian enclave of Gaza after Prime Minister Benjamin Netanyahu dismissed calls for a halt to fighting to ease a worsening humanitarian crisis.

The tunnels are a prime objective for Israel as it expands ground operations inside Gaza to wipe out Hamas, which rules Gaza, following its deadly surprise attack on southern Israel three weeks ago.

“Over the last day, combined IDF (Israel Defense Forces) struck approximately 300 targets, including anti-tank missile and rocket launch posts below shafts, as well as military compounds inside underground tunnels belonging to the Hamas terrorist organization,” the Israeli military said in a statement.

Militants responded with anti-tank missiles and machine gun fire, it added.

“The soldiers killed terrorists and directed air forces to real-time strikes on targets and terror infrastructure,” the Israeli military said.

Israeli forces also bombed Gaza overnight in air, sea and ground attacks, hitting northwestern areas of the coastal enclave where Israeli troops were operating on the ground, witnesses said on Tuesday.

Witnesses said Israeli forces targeted Gaza’s main north-south road on Monday and attacked Gaza City from two directions. Israel said its troops freed a soldier from Hamas captivity.

The Islamist group has so far released four civilians from the 240 hostages Israel says were captured in the Oct. 7 attacks in which about 1,400 people were killed. Many of the hostages are believed to held in the tunnels.

Gaza health authorities say that 8,306 people, including 3,457 minors, have been killed in Israeli attacks since Oct. 7. U.N. officials say more than 1.4 million of Gaza’s civilian population of about 2.3 million have been made homeless.

Reuters has been unable to independently verify casualty counts.

The al-Qassam Brigades, Hamas’s armed wing, said militants clashed early on Tuesday with Israeli forces invading southern Gaza. Four vehicles were targeted with al-Yassin 105 missiles, it said, referring to locally produced anti-tank missiles.

The militants also fired at two Israeli tanks and bulldozers in northwest Gaza, al-Qassam said. In Beit Hanoun, in the northeast, they “liquidated” an Israeli unit which was ambushed as it entered a building.

Reuters was unable to confirm the reports of fighting. The Israeli military had no immediate comment on the Hamas accounts.

The mounting death toll has drawn calls from the United States, Israel’s main ally, other countries and the U.N. for a pause in fighting to allow more humanitarian aid to reach the beseiged enclave, where food, fuel, drinking water and medicine are all in short supply.

Netanyahu said on Monday that Israel would not agree to a cessation of hostilities and would press ahead with its plans to wipe out Hamas.

“Calls for a ceasefire are calls for Israel to surrender to Hamas, to surrender to terrorism, to surrender to barbarism. That will not happen,” Netanyahu said in televised remarks.

A World Health Organization official in Geneva said on Tuesday that a “public health catastrophe” was imminent in Gaza.

Air strikes on Monday night outside the Indonesian Hospital in the northern Gaza Strip caused a power cut and doctors said they feared for the lives of 250 injured Palestinians being treated there as fuel runs low.

“Running out of fuel would mean no power and no power would mean the inevitable death of many patients at intensive care unit and wounded in surgery departments,” Dr. Moaeen Al-Masri said.

Footage obtained by Reuters showed Palestinians carrying bodies of victims of Israel’s ground offensive on a donkey cart to the Indonesian Hospital. Dozens of Palestinians walked behind the cart and around it chanting “Allahu akbar” (God is Greatest).

Health officials at the Turkish Friendship Hospital in Gaza City also reported that bombing damage to the third floor had endangered the lives of cancer patients.

The U.N. humanitarian office (OCHA) said that water supply through a pipeline from Israel to southern Gaza was cut off on Monday for unknown reasons, and that an announced repair of another pipeline to central Gaza did not take place.

“At the time of writing, no water is provided to Gaza from Israel,” OCHA said.

Significantly fewer humanitarian aid trucks than needed have reached the besieged enclave, U.N. officials said, and civil order has broken down with people storming U.N. warehouses in search of food.

That has put four U.N. aid distribution centres and a storage facility out of action, the U.N. agency for Palestinian refugees (UNRWA) said on Monday.

“It’s a disaster on top of a disaster. Health needs are soaring and our ability to meet those needs is rapidly declining,” WHO regional emergencies chief Rick Brennan said, reiterating international calls for a ceasefire to enable a larger humanitarian operation.

Aid trucks have been trickling into Gaza from Egypt over the past week via Rafah, the main crossing that does not border Israel. It has become the main point of aid delivery since Israel imposed a total siege of Gaza after Oct. 7.

OCHA said 26 trucks entered the Rafah crossing on Monday. Before the conflict, an average of about 450 aid trucks were arriving daily in Gaza.

The conflict has led to demonstrations worldwide in support of the Palestinians, and a rise in antisemitic and Islamophobic harassment.

The U.S. National Muslim Democratic Council said it would work to mobilise millions of Muslim voters to withhold votes towards President Joe Biden’s 2024 reelection unless he takes immediate steps to secure a Gaza ceasefire.

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“We left Kidal this morning,” a source in the U.N. peacekeeping mission based in the town said.    

Following a coup in 2020, Mali’s new military rulers in June ordered the peacekeepers out, proclaiming the “failure” of their mission.   

The United Nations Multidimensional Integrated Stabilization Mission in Mali (MINUSMA), whose strength has hovered around 15,000 soldiers and police officers, has seen 180 of its members killed.  

The original plan was for the peacekeeping force to have withdrawn from the West African nation by the end of the year, but the UN troops began withdrawing from their compounds as early as July.   

The U.N. peacekeeping force says it has had to destroy or decommission equipment such as vehicles, ammunition and generators that it was unable to take away, in accordance with UN rules.   

The MINUSMA withdrawal has exacerbated rivalries between armed groups present in the north of the country and the Malian state.   

These groups do not want the UN camps handed back to the Malian army, saying such a move would contravene ceasefire and peace deals struck with Bamako in 2014 and 2015.   

However the army is pushing to take back control of the evacuated camps.   

The predominantly Tuareg separatist groups who oppose the army have resumed hostilities against it.    

The Al-Qaeda-linked Support Group for Islam and Muslims (GSIM) has also stepped up attacks against the military.   

That means that MINUSMA’s pull-out is all the more perilous, taking place against the background of this renewal of hostilities — and on what are perceived to be restrictions imposed by the authorities on its ability to maneuver. 

Knesset reporter Carrie Keller-Lynn discusses Gallant’s meeting with military reporters and her visit to Nir Oz with survivors, as tech editor Sharon Wrobel looks at Israel’s ports

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