Eurozone Inflation Strongest Since 2023

(RTTNews) - Eurozone inflation accelerated to the highest level in nearly three years in August, reinforcing expectations for an interest rate hike at the European Central Bank's meeting next week.

Inflation advanced to 3.3 percent in August, as expected, from 2.9 percent in July, flash data from Eurostat revealed Tuesday. The rate was the highest since September 2023, when inflation was 4.4 percent.

Inflation continues to remain above the ECB's medium-term target of 2 percent.

Meanwhile, core inflation, which excludes prices of food, alcohol and energy softened to 2.4 percent while it was expected to remain unchanged at 2.5 percent.

The ECB is widely expected to hike its policy rates by 25 basis points at its next meeting on September 10. The bank had raised its key interest rates for the first time in nearly three years in June. Following a quarter point-hike, the ECB had kept rates unchanged at its July meeting.

"For the European Central Bank, the jump in the headline inflation rate makes a September hike easier to sell," ING economist Bert Colijn said. "But the stubbornly benign core inflation rate should make for an interesting debate about a possible subsequent hike into restrictive territory," added Colijn.

On a monthly basis, consumer prices gained 0.4 percent in August.

Data showed that energy prices rose at a faster pace of 14.3 percent after climbing 10.3 percent. Non-energy industrial goods prices grew 1.2 percent following a 0.9 percent rise.

Prices of food, alcohol and tobacco logged a steady growth of 1.2 percent, while services inflation softened to 3.0 percent from 3.3 percent.