Euro-Area Inflation Hits 2.9%, ECB Rate Hike Looms in September

European Central Bank policymakers are likely to raise interest rates again in September due to rising inflation in the euro area. The annual rate of consumer price growth picked up to 2.9% in July, from 2.8% in June, according to Eurostat.

The increase is largely driven by a surge in energy prices, which rose 10% across the 21-nation bloc. Economists and investors predict that the ECB will hike borrowing costs by a quarter-point in September, adding to the previous quarter-point step in June.

Some policymakers have already signaled their intention to raise rates further. Austria's Martin Kocher noted that 'uncertainty and volatility remain high,' while his Slovak colleague Peter Kazimir argued that the ECB will need to raise rates at least once more 'even if the situation improves somewhat.'

The euro-zone economy has weathered the crisis well so far, with output expanding at its strongest pace in over a year in the second quarter. However, inflation remains a concern, and policymakers will receive one more set of inflation figures - for August - ahead of their September meeting.