Euro zone inflation rises above 3%, cementing ECB rate hike bets
Energy costs pushed eurozone inflation to 3.3%, strengthening expectations that the European Central Bank will raise rates again next week.
- On Tuesday, Eurostat reported that inflation across the 21 nations sharing the euro accelerated to 3.3% in August from 2.9% in July, driven primarily by rising energy costs.
- The Iran war and the blockage of the Strait of Hormuz continue to disrupt energy markets, driving energy inflation to 14.3% from 10.3% while pressuring crude oil and natural gas prices.
- Core inflation, which excludes volatile food and fuel prices, dipped to 2.4% last month from 2.5% as growth in services prices slowed to 3% from 3.3%.
- Traders locked in expectations for a European Central Bank rate hike to 2.50% on Sept. 10, with market pricing on Tuesday morning putting a 98.9% probability on the increase.
- For SMEs, further financing costs could mean investment plans being "indefinitely postponed or abandoned altogether," analysts warn, even as policymakers hold rates at a 'neutral' level.
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asiae.co.krInflation in the Eurozone (21 countries using the euro) surged to 3.3% last month, reaching its highest level in three years. Consequently, the likelihood has increased that the European Central Bank (ECB) will raise interest rates next week in response to inflationary pressures. Eurostat, the statistical agency of the European Union (EU), announced on the 1st (local time) that the Eurozone's Consumer Price Index (CPI) rose 3.3% year-on-year in …
Inflation in the euro area was 3.3% in August, driven by rising energy prices linked to tensions in the Middle East, reinforcing the likelihood of an increase in ECB rates L
This increase in prices is one of the direct consequences of the war in the Middle East.
According to Eurostat's first estimate, energy prices rose 14.3% year-on-year last month, compared to 10.3% in July
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