Eurozone inflation could accelerate to 3.3% in August, the highest in three years and further strengthening expectations that the European Central Bank will raise interest rates in September, according to market forecasts cited by Reuters.
In July, annual inflation in the eurozone reached 2.9%, compared to 2.8% in June. The main factor behind the acceleration was energy prices, which rose by 10% year-on-year. Core inflation, which excludes energy and food, also increased to 2.5%.
The ECB has already raised its key interest rate in June by 0.25 percentage points to 2.25% - the first increase in nearly three years. The central bank then said that higher energy prices and the conflict in the Middle East were increasing inflationary pressures.
According to sources at the Reuters agency, ECB governors are ready to raise interest rates once again in September - to 2.50%. However, the decision will depend on inflation data in August and the central bank's new economic forecasts, which will be presented at the meeting on September 9 and 10.
Additional pressure comes from natural gas and fuel prices. At the same time, the eurozone economy is showing greater resilience than expected, which gives the ECB more freedom to tighten monetary policy without, according to analysts, causing a sharp decline in economic activity.
Markets have already almost fully calculated an increase in interest rates by 0.25 percentage points in September. Some investors expect another hike by the end of 2026 if inflation remains persistently above the ECB's 2% target.