Eurozone Inflation Climbs in August as Energy Prices Soar

07:22 AM EDT, 09/01/2026 (MT Newswires) -- The euro area's annual inflation rate accelerated in August as the ongoing war in the Middle East keeps energy prices elevated, further bolstering expectations that the European Central Bank would increase its interest rates at its upcoming monetary policy meeting. Flash estimates published by Eurostat on Tuesday showed that eurozone inflation climbed to 3.3% in August from 2.9% in July, in line with consensus expectations. Month over month, consumer prices were 0.4% higher, following a 0.2% rise previously. Energy inflation was the top contributor to the increase in the annual rate, rising to 14.3% during the month from the prior 10.3%. Inflation in non-energy industrial goods also edged up, while the price growth in services eased to 3% from 3.3%. Meanwhile, growth in the prices of food, alcohol and tobacco remained stable at 1.2%. Excluding energy, food, alcohol and tobacco, the annual inflation rate came in at 2.4%, below the previous and expected 2.5%. On a monthly basis, core consumer prices edged up 0.2%. "Yes, headline inflation increased from 2.9 to 3.3% in August, but core inflation fell back to 2.4%. Upside risks to inflation remain aplenty but the core rate remains surprisingly benign six months into the Middle East conflict," ING said, noting that the latest headline inflation reading marks the highest since the war began. "Energy prices could see another leg up, droughts are impacting supply chains, and the economy is still performing reasonably well, which makes the pass-through of higher costs easier. And indicators of wage growth have started to move up. So while it's fine now, do expect core inflation to rise further in the months ahead." Among the euro area's top economies, preliminary data showed that harmonized inflation rates rose year over year in Germany and France. Italy and Spain also saw increases in the harmonized index of consumer prices over the period. "For the European Central Bank, the jump in the headline inflation rate makes a September hike easier to sell. But the stubbornly benign core inflation rate should make for an interesting debate about a possible subsequent hike into restrictive territory," the research firm added. The ECB is set to decide on its monetary policy on Sept. 10.