Inflation in the euro area sped up to 3.3 percent in August from 2.9 percent last month as surging energy prices pushed costs higher and intensified pressure on the European Central Bank to increase interest rates later this month, the Financial Times reported.
The increase in prices throughout the 21-member eurozone was attributed almost exclusively to an 14.3-percent jump in energy prices compared with August a year earlier, according to Eurostat data published on Tuesday. High oil and natural gas prices have risen due to the continuing battle raging in Iran and through shipment disruptions in the Strait of Hormuz.
The latest inflation reading is well above the ECB’s 2% target and is expected to reinforce market expectations for a quarter-point rate increase at the central bank’s Sept. 9-10 meeting. The ECB raised rates in June but left them unchanged at its July meeting.
However, underlying price pressures showed some signs of easing. Core inflation, which excludes volatile food and energy prices, fell to 2.4% from 2.5% in July. Services inflation also slowed to 3% from 3.3%.
The figures leave policymakers balancing the need to contain inflation against the risk that higher borrowing costs could weaken economic growth
