Euro Zone Inflation Surges Above 3%, Higher Interest Rates Loom

Higher interest rates are likely to follow as Euro zone inflation returns above 3%. Inflation in the euro area hit 3.3% in August, up from 2.9% in July and 2.8% in June, mainly due to higher energy prices linked to the Iran war.

The European Central Bank will consider a quarter percentage point interest rate hike in response to these inflation numbers, following its previous increase in June.

However, economists warn that this could have a negative impact on heavily indebted households and struggling small- and medium-sized businesses.