The eurozone (21 countries using the euro) saw last month's inflation rate surge to 3.3%, the highest in three years. That raised the likelihood that the European Central Bank (ECB) will move to raise interest rates next week to counter inflationary pressure.
Eurostat, the statistical office of the European Union (EU), said on the 1st that the eurozone's consumer price index (CPI) in August rose 3.3% from a year earlier. That is higher than the 2.9% inflation rate in July, and the increase was the largest since September 2023 (4.3%).
Energy prices drove up the inflation rate. With the prolonged war between the United States and Iran, energy prices rose 14.3%. The services institutional sector (3.0%) followed. Core inflation, which excludes volatile items such as food and energy, was 2.4%, slightly lower than the previous month (2.5%). Prices for food, alcohol, and tobacco rose 1.2%, holding near the previous month's level.
Markets expect the ECB to implement an additional rate hike at this month's monetary policy meeting, following July. Earlier, in June, the ECB raised its benchmark rate for the first time in about 2 years and 9 months, from an annual 2.0% to 2.25%. If it raises rates again this month, it is expected to reach 2.50%.