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Eurozone inflation jumps to 3.3% in August amid higher energy costs
The rise is the highest since September 2023, and it reinforces expectations for a further ECB 25 basis point hike on September 10.
Eurozone inflation accelerated to 3.3% in August, up from 2.9% in July, marking the highest rate since September 2023, according to Action Forex. The outlet links the increase to renewed Middle East tensions that lifted energy costs and added upward pressure on prices.
Core inflation, excluding volatile food and energy, eased slightly to 2.4% in August from 2.5% the previous month, Action Forex said. Even so, economists cited by the outlet warned that additional negative effects from geopolitical factors could show up in coming months.
The higher inflation level strengthens signals for additional European Central Bank monetary tightening, with market expectations pointing to another 25 basis point hike at the ECB policy meeting on September 10. At the same time, Action Forex noted that the ECB is unlikely to signal more hikes beyond that move.
Action Forex also said economists expect a high probability the ECB would stop the tightening cycle after September if current policy adjustments are enough to contain price pressures, supported by a softer labor market, no significant rise in wage growth, and weak economic growth, especially if the geopolitical crisis deepens.