Energy Costs Fuel Eurozone Inflation Surge

The European Central Bank is facing renewed pressure to raise interest rates as inflation in the eurozone rose by 0.4 percentage points in August, reaching 3.3 per cent.

This increase is largely driven by high energy prices, which surged by 14.3 per cent from July's 10.3 per cent. The 'non-energy industrial goods' category also saw a rise of 1.2 per cent from 0.9 per cent in July.

The cost of food, alcohol and tobacco remained stable at 1.2 per cent, while the 'services' category recorded an easing to 3.0 per cent from 3.3 per cent in July.

This is not the first time that high energy prices have driven overall inflation; it had already happened in July when rising energy costs were a key factor in pushing up the cost-of-living index. However, this time the rise is more pronounced and could prompt the ECB to raise interest rates at its 10 September meeting.