Business & Finance
Eurozone inflation rises to 3.3% in August as energy prices surge
Accelerating energy costs pushed headline inflation to a two-year high, increasing market expectations of a European Central Bank interest rate hike.
The short version
- Eurozone annual inflation rose to 3.3% in August from 2.9% in July, driven primarily by a spike in energy costs.
- Core inflation, which excludes volatile energy and food prices, decreased slightly to 2.4%.
- Financial markets anticipate a 25 basis point interest rate increase by the European Central Bank at its September 10 meeting.
Key facts
- Eurostat reported in a flash estimate that euro area headline inflation reached 3.3% in August, up from 2.9% in July and the highest level since September 2024.[CNBC]
- Energy inflation in the eurozone accelerated to 14.3% in August compared to 10.3% in July, propelled by natural gas market disruptions and the war involving Iran.[CNBC]
- Core inflation, which filters out energy, food, alcohol, and tobacco, edged down to 2.4% in August from 2.5% the previous month.[CNBC]
- Following the inflation report, LSEG data indicated traders priced in a 98.9% probability of a 25 basis point rate hike to 2.5% by the European Central Bank at its September 10 meeting.[CNBC]
What remains uncertain
- The European Central Bank's final policy decision on interest rates will not be known until its September 10 meeting.[CNBC]